( 


THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 


V 


„  y 

raduate  School  of  Business  Administration 

"city  of  California 
Los  Angeles  24,  California 


ILegal  anb  J8u  stnestf  publication^  of 
i\onalb  Press  Company 

229  BROADWAY,  NEW  YORK 


CORPORATE  ORGANIZATION. 

By  THOMAS  CONYNGTON,  of  the  New  York  Bar. 
402  pages.  6  x  9  in.  1908.  Buckram  binding. 

CORPORATE  MANAGEMENT. 

By  THOMAS  CONYNGTON,  of  the  New  York  Bar. 
Third  Edition  422  pages.  6x9  in.  1909.  Buck- 
ram binding. 

CORPORATION  LAWS  OF  ALL  STATES. 
By   M.    U.    OVERLAND,  of   the    New  York   Bar. 
Interleaved    Edition.     500  pages.    6x9  in.     1909. 
Buckram  binding. 

CORPORATE  FINANCE  AND  ACCOUNTING. 
By  H.  C.  BENTLEY,  C.  P.  A.  S2S  pages.  6x9  in. 
1908.  Buckram  binding. 

FINANCING  AN  ENTERPRISE. 

By  FRANCIS  COOPER.  Third  Edition.  543  pages. 
5&x8Kin.  1909.  2vols.  Buckram  binding. 

CONDITIONAL  SALES. 

By  FRED  BENSON  HARING,  of  the  Buffalo  Bar. 
Interleaved  Edition.  370  pages.  6x9  in.  1910. 
Buckram  binding. 

MAINE  CORPORATIONS. 

By  H.  M.  HEATH,  of  the  Maine  Bar.  300  pages. 
6x9in.  1907.  Buckram  binding. 

DICKSEE'S  AUDITING. 

By  R.  H.  MONTGOMERY,  C.  P.  A.  Authorized 
American  Edition,  Revised  and  Enlarged.  586 
pages.  6x9  in.  1909.  Cloth  binding. 

THE  LAW  OF  REAL  ESTATE  BROKERS. 
By  FRED    L.    GROSS,  of  the  Brooklyn  Bar.     490 
pages.    6x9  in.    1910.    Buckram  binding. 

Complete  Descriptive  Catalogue  and  Price  List 
on  application. 


THE   LAW 


OF 


REAL  ESTATE  BROKERS 


WITH   1917  SUPPLEMENT 


A  MANUAL,   WITH  FORMS  INCLUDED,  FOR  THE  USE  OF 
LAWYERS  AND  REAL  ESTATE  OPERATORS 


BY 

FRED  L.  GROSS 

Of  the  New  York  Bar 


NEW  YORK 

THE  RONALD   PRESS  COMPANY 
1917 


Copyright,  1910,  by 
THE  RONALD  PRESS  COMPANY 

Copyright,  1917,  by 
THE  RONALD  PRESS  COMPANY 


Bus.  Admin. 
Library 


S3  $.3 

PREFACE. 


In  the  course  of  a  real  estate  practice  extending  over 
a  number  of  years,  the  author  has  felt  the  need  of  some 
reasonably  complete  and  conveniently  arranged  work  on 
the  law  governing  the  transactions  and  relations  of  real 
estate  brokers.  The  obligation,  as  well  as  the  desire,  to 
keep  accurately  informed,  resulted  in  his  accumulating 
a  large  amount  of  material  relating  to  the  subject.  He 
was  led  to  believe  that  this  might  be  of  use  to  other 
lawyers,  and  of  practical  value  to  real  estate  brokers  as 
well.  The  present  publication  is  the  result. 

In  preparing  this  work  the  author  has  used  the  mate- 
rial collected  for  his  own  use,  and  has  largely  supple- 
mented it  by  research  and  study  specially  devoted  to  pro- 
ducing from  his  original  collection  of  notes  a  book  which 
should  accurately  exhibit  the  law  as  it  is. 

In  the  selection  of  supporting  authorities  the  author 
has  endeavored  to  avoid  the  too  common  habit  of  dump- 
ing in  authorities  secured  from  anywhere  and  every- 
where, leaving  the  reader  to  ascertain  whether  they  af- 
fect the  statement  for  which  they  are  cited  or  not. 
Whal  Pascal  said  concerning  his  "Provincial  Letters" 
may  be  conscientiously  claimed  for  these  pages:  "I  did 
not  make  use  of  a  single  passage  without  having  myself 
read  it  in  the  book  from  which  it  is  cited,  without  having 
examined  the  subject  of  which  it  treats,  and  without  hav- 
ing read  what  went  before  and  followed,  so  that  I  might 
run  no  risk  of  quoting  an  objection  as  an  answer  which 
would  have  been  blameworthy  and  unfair."  Beyond 
this,  by  ample  quotations,  the  author  has  sought,  wher- 

iii 


IV  PREFACE. 

ever  possible,  to  state  principles  in  the  language  of  the 
courts,  rather  than  substitute  his  own  language,  thus 
presenting  what  the  courts  have  really  said,  instead  of 
what  the  text  writer  says  they  have  said. 

The  author  believes  the  book  will  be  of  direct  and  ma- 
terial value  to  the  real  estate  broker.  The  maxim  im- 
presses upon  us  the  fact  that  ignorance  of  the  law  ex- 
cuses no  one.  In  other  words,  everybody  is  supposed 
to  know  the  law.  The  real  estate  broker  may  therefore 
find  a  service  rendered  him  in  these  pages  which  place 
before  him  much  legal  knowledge  directly  affecting  his 
vocation. 

It  must  be  borne  in  mind,  however,  that  the  present 
volume  is  not  intended  to  make  the  broker  his  own  law- 
yer. It  will  inform  him  on  many  important  details  of 
his  calling,  a  knowledge  of  which  will  tend  to  prevent 
mistakes  and  lawsuits.  It  should  also  enable  him  to 
so  conduct  his  business  transactions  that  when  litigation 
cannot  be  avoided  he  may  place  in  his  lawyer's  hands 
a  just  and  intelligent  cause.  But  it  will  not  qualify  the 
broker  to  perform  the  duties  of  an  attorney,  and  when 
litigation  threatens,  the  prompt  employment  of  compe- 
tent legal  advisers  is  the  course  of  safety  and  of  wisdom. 

FRED  L.  GROSS, 

189  MONTAGUE  STREET, 
Brooklyn,  N.  Y.,  November  1, 1910. 


TABLE   OF  CONTENTS. 


PART  I.— POWERS,  AUTHORITY  AND  RIGHTS  OF  BROKER. 
Chapter  I. — Introductory. 

5  1.  Definition  of  Real  Estate  Broker. 

2.  Application  of  Term. 

3.  Functions  of  a  Broker. 

4.  Definition  of  Terms. 

Chapter  II. — Who  May  Act  as  Broker.    License  Requirements. 

I  5.    General  Statement. 

6.  Married  Women  as  Brokers. 

7.  "         "        "  State  Laws. 

8.  Minors. 

9.  Partnerships. 

10.  Corporations. 

11.  License  or  Tax  on  Right  to  Act  as  Broker. 

Chapter  III.— Written  and  Oral  Authority  of  Broker. 

12.  General  Statement. 

13.  Form  of  Authorization. 

14.  New  York;   Authority  to  Negotiate   Sale. 

15.  "          "  "  "          "  Loan. 

16.  New  Jersey;   Authority  to  Sell  or  Exchange. 

17.  California;   Authority  to  Purchase  or  Sell. 

18.  Missouri;   Authority  to  Sell. 

19.  "  "    Negotiate   Loan. 

20.  Nebraska;    Authority  to   Sell. 

21.  Washington;   Authority  to  Sell  or  Purchase. 

22.  Montana;  Authority  to  Purchase  or  Sell. 

23.  Authority  to  Collect  Rents. 

24.  Statute  of  Frauds   as  Affecting  Brokers. 

V 


VI  TABLE   OF   CONTENTS. 

25.  Agreements  Not  to  be  Performed   within  a  Year. 

26.  Classification  of  Agreements  Not  to  be  Performed  within  a  Year. 

(a)  Where  No  Time  is  Fixed. 

(b)  Agreements  for  More  than  a  Year. 

(c)  Agreements  for  More  than  a  Year,  but  Terminable  upon  Some 
Contingency. 


Chapter  IV. — Broker's  Power  to  Sign  Contract. 

§  27.  General  Statement. 

28.  Broker's  Authority  to  Sign  Contract. 

29.  Powers  Conferred  by  Instructions  to  Sell  Property. 

30.  "  "  "     Appointment   as  Agent. 

31.  Broker's   Power  to   Contract   as   Affected   by   Statutory   Require- 

ments. 

32.  New  York  Rule. 

33.  New  Jersey  Rule. 

34.  Massachusetts  Rule. 

35.  California  Rule. 

36.  Illinois  Rule. 

37.  Rule  in  Other  States. 

38.  When   Broker  has   Authority   to   Sign   Contract. 

39.  Mere  Employment  Does  Not  Give  Power  to  Contract. 

40.  Extent  of  Authority  Ordinarily  Conferred  by  Employment. 

41.  Dissenting  Opinions  as  to  Incidental  Power  to  Contract. 

42.  Ratification  of  Contract  Signed  by  Agent. 

43.  Liability  of  Agent  for  Signing  Unauthorized  Contract. 

44.  Formalities  Where  Agent  has  Authority  to  Sign  Contract. 

45.  Authority  to  Cancel  or  Surrender  Contract. 

46.  Enforcing  Contract  Made  by  Agent. 


Chapter  V. — Broker  Acting  for  Both  Parties. 

§  47.  General  Statement. 

48.  Broker  Not  to  Act  for  Both  Sides. 

49.  Acting  for  Both  Parties  a  Breach  of  Contract. 

50.  "         "      "  "      Constitutes  a  Fraud. 

51.  The  Rule  Applies  to  Exchange  of  Property. 

52.  Acting  for  Both  Parties  with  Their  Knowledge. 

53.  "        "        "          "        Not  Unlawful  in   Itself. 

54.  Broker  Vested  with  No  Discretion  May  Act  for  Both  Parties. 

55.  Compensation  of  Broker  Without  Discretion. 

56.  General  Rule  as  to  Discretion. 

57.  Reason  for  the  Rule. 

58.  How  Question  of  Double  Employment  is  Raised. 


TABLE    OF    CONTENTS.  Vll 

Chapter  VI. — Broker's  Right  to  Interest  in  Profits. 

59.  General  Statement. 

60.  Agent  Must  Act  in  Interest  of  Principal. 

61.  "          "      Not  be  Personally  Interested. 

62.  "    May  Not  Also  Act  as  Principal. 

63.  "        "        "    Make  Secret  Profits. 

64.  Broker's  Employees  Governed  by  Same  Rules. 

65.  Rule  Not  Affected  by  Agent's  Honesty  of  Purpose. 

66.  Act  of  Agent  in  His  Own  Interest  Presumed  Injurious. 

67.  "      "        "      "      "      "  "  Voidable,  but  May  be  Rati- 

fied. 

68.  Agent  May  be   Personally  Interested   with  Consent  of   Principal. 

69.  Broker  Without  Discretion  as  Disclosed  Principal  or  Subsequent 

Purchaser. 

70.  Broker  May  Not  Lawfully  Combine  with  Others  to  Secure  Secret 

Profits. 

71.  Person  Sharing  Benefits  Liable  though  Unaware  of  Fraud. 


Chapter  VII. — General  Authority  of  Broker. 

72.  General  Statement. 

73.  Agent's  Authority  to  Receive  Payment  for  Property  Sold. 

74.  Broker's   Power   to   Employ   Other   Brokers. 

75.  Renting  Agents. 

76.  In  General,  Renting  Agency  Terminates  on  Death  of  Principal. 

77.  Agent's  Right  to  Dispossess  Tenants.    New  York  Rule. 

78.  Insurance  Brokers. 


Chapter  VIII. — Revocation  of  Broker's  Authority. 

79.  General  Statement. 

80.  Termination  of  Agency  by  Mutual  Consent. 

81.  by  Performance  of  Object  of  Employment. 

82.  of  Agency  at  Pleasure  of  Principal. 

83.  by  Principal  after  Lapse  of  Reasonable  Time. 

84.  Limitations  on  Principal's  Power  to  Terminate  Agency  at  Pleasure. 

85.  Revocation  of  Agency  by  Principal  Must  be  in  Good  Faith. 

86.  Must  be  Timely. 

87.  Termination  of  Agency  by  Previous   Sale. 

88.  Good  Faith  Necessary  to  Termination  of  Agency  by  Previous  Sale. 

89.  Termination  by  Destruction  of  Subject  Matter. 

90.  by   Bankruptcy. 

91.  by  Insanity. 

92.  "  by  Death. 


Vlll  TABLE   OF   CONTENTS. 

93.  Fraud  of  Agent  as  Revocation. 

94.  Revocation  as  to  Third  Parties. 


PART  H.— COMMISSIONS  AND  THEIR  RECOVERY. 
Chapter  IX. — General  Rules  as  to  Commissions. 

§  95.  General   Statement. 

96.  When  Commissions  are  Earned. 

97.  Respective  Rights   of  Brokers  when   Several  are  Employed. 

98.  Rule  as  to  Commissions  when  Several  Brokers  are  Employed. 

99.  Liability  of  Principal  for  Commissions   to   Exclusive  Agent. 

100.  "  for  Commissions  when  Principal  Negotiates  Sale. 

101.  Rule  as  to  Commissions  when  Broker's  Efforts  Fail. 

102.  On  What  Recovery  of  Commissions  Depends. 

Chapter  X. — Broker  Must  Be  Employed. 

103.  General  Statement. 

104.  Volunteers  Not  Entitled  to  Commission. 

105.  When  Party  Acting  is  a  Volunteer. 

106.  Employment  Necessary  to  Recovery  of  Commissions. 

107.  Manner  of  Employment. 

108.  Employment  Must  be  by  Owner  or  Authorized  Agent. 

109.  Ratification   Equivalent   to   Original   Employment. 

110.  Intent  to  Ratify  Must  be  Plain. 

111.  Ratification  by  Implication. 

112.  "  Must  be  with  Full  Knowledge  of  Facts. 

Chapter  XI. — Broker  Must  Be  Procuring  Cause  of  Sale. 

113.  General  Statement. 

114.  Methods  of  Earning  Commission. 

115.  Obligations  of  the  Broker. 

116.  Procuring  Cause. 

117.  What  is  Required  to  Constitute  a  Broker  a  "  Procuring  Cause." 

118.  Procuring  Cause  as  Affected  by  Special  Contract. 

119.  General  Rule  as  to  "Procuring  Cause." 

120.  "  Procuring  Cause  "  when  Representing  Purchaser. 

121.  Effect  of  Promises  to   Pay  Commission. 

122.  Unsuccessful  Efforts. 

123.  Failure  Through  Fault  of  Principal. 

124.  Purchaser  Taking  Title  in  Another's  Name. 

125.  Effort  Required  of  Broker. 


TABLE    OF    CONTENTS.  IX 


120.  Presence  of  Broker. 

127.  Introductions. 

1_!<S.  Advertising. 

129.  Consummation  of  Sale  by  Another  Broker. 

130.  "       "       "     Principal. 


Chapter  XII. — Sale  Must  Be  on  Employer's  Terms. 

131.  General  Statement. 

132.  Purchaser  Must  Agree  to  Seller's  Terms. 

133.  All  of  Seller's  Terms  Must  be  Met. 

134.  Acceptance  by  Owner  of  Different  Terms. 

135.  Broker's   Commission,   if   He   is   "  Procuring  Cause,"   Not   Affected 

by  Variation  of  Terms. 

136.  Requirements  as   to  Price. 

137.  Increase   of  Price  by  Owner. 

138.  Time  of  Performance. 

139.  Liability  of  Broker  for  Failure  to  Sell. 


Chapter  XIII.— Broker  Must  Act  in  Good  Faith. 

140.  General  Statement. 

141.  Good  Faith. 

142.  Accepting  Pay  from  or  Acting  for  Other  Party  to  the  Transaction. 

143.  Broker    as    a    Principal    in    the    Transaction    or    Making   a    Profit 

Therefrom  Other  Than  His  Commissions. 

144.  Broker  Must  Accept  Largest  Offer. 

145.  When  Refusal  to  Disclose  Information  is  Not  Bad  Faith. 


Chapter  XIV. — Availability  of  Purchaser. 

146.  General  Statement. 

147.  Ready  and  Willing  to  Purchase. 

148.  Purchaser  Not  Ready  and  Willing. 

149.  Procuring  Person  Who  Takes  Option. 

150.  Change  of  Mind  by  Vendor. 

151.  Disclosure   of   Purchaser. 

152.  Waiver  of  Right  to  Disclosure  of  Purchaser. 

153.  Financial  Ability  of   Purchaser. 

154.  When  Financial  Ability  of  Purchaser  Need  Not  be  Shown. 

155.  Burden  of  Proof  as  to  Financial  Ability  of  Purchaser. 


TABLE   OF    CONTENTS. 

Chapter  XV.— Transaction   Must   Be   Complete. 

156.  General  Statement. 

157.  What  Constitutes  a  Completed  Transaction. 

158.  General  Rule  as  to  Completeness  of  Transaction. 

159.  All  Details  of  Sale  Must  be  Agreed  Upon. 

160.  Effect  of  Special  Conditions  on  Completeness  of  Transaction. 

161.  "        "    Failure  to  Contract. 

162.  Modification  of  Terms. 

163.  Options   and  "  Alternative "  Contracts. 

164.  Abandonment  by  Broker. 


Chapter  XVI. — Failure  of  Principal  to  Complete. 

165.  General  Statement. 

166.  The  Broker's  Obligation. 

167.  General  Rule  as  to  Failure  of  Principal  to  Complete. 

168.  Defective  Title  as  Cause  of  Failure. 

169.  Special  Agreements  as  to  Title. 

170.  "        Causes  of  Failure. 


Chapter  XVII. — Failure  of  Customer  to  Complete. 

§  171.    General  Statement. 

172.  "        Rule  as  to  Failure  of  Customer. 

173.  Abandonment  of  Broker  by  Customer. 

174.  Misrepresentations  by  Vendor. 


Chapter  XVIII. — Commissions  on  Exchanges  of  Property. 

§  175.  General  Statement. 

176.  Conflicting  Decisions  as  to  When  Commissions  are  Earned. 

177.  Commissions  on  Exchanges. 

178.  Employment. 

179.  Authority  to  Sell  Does   Not  Give  Authority  to  Exchange. 

180.  Commissions  from  Both  Sides. 

181.  Rule  when  Contract  has  been  Executed. 

182.  Reason  for  Rule. 

183.  Rule  as  Affected  by  Broker's  Bad  Faith. 


Chapter  XIX. — Commissions  on  Loans. 

§  184.    General  Statement. 

185.    Commissions  for  Procuring  Loan. 


TABLE   OF   CONTENTS.  XI 

186.  New  York  Rule. 

187.  "        "          "    as  Affected  by  Failure  of  Principal. 

188.  The  Rule  in  Some  of  the  Other  States. 

189.  General  Statement  of  Rule. 

190.  Further  Statement  of  Rule. 

191.  Failure  to  Complete  on  Account  of  Defects,  etc. 

192.  Employment  and  Written  Authority. 

193.  Terms  of  Principal. 

194.  Recovery  on  Breach  by  Principal. 

195.  Amount  of  Commissions  on  Loan. 


Chapter  XX. — Commissions  on  Leases. 

196.  General  Statement. 

197.  When  Broker's  Obligations  are  Performed. 

198.  General   Requirements  for   Recovery  of  Commissions. 

199.  Liability  of  Tenant  for  Commissions. 

200.  Amount  of  Commissions  for  Procuring  Lease. 

201.  Effect  of  Failure  of  Lease. 

202.  Operation  of  Rule  as  to  Failure  of  Lease. 


Chapter  XXI. — Who  is  Liable  for  Commissions. 

203.  General  Statement. 

204.  The  Employer  is  Usually  Liable  for  Broker's  Commissions. 

205.  Promises  to  Pay  Commissions. 

206.  Liability  of  Persons  Not  Owning  the  Property. 

207.  Trustees,  Executors  and  Guardians. 

208.  Commissions  from  Purchaser. 

209.  Purchaser's  Promise  to  Pay  Commission. 

210.  Broker  Employed  by  Purchaser. 


Chapter  XXII. — Amount  of  Compensation. 

211.  General  Statement. 

212.  Commissions.    How  Fixed. 

213.  Agreed  Compensation. 

214.  Measure  of  Compensation. 

215.  All  in  Excess  of  Fixed  Price. 

210.  Agreements  for  All  in  Excess  of  Fixed  Price. 

217.  Rule  as  to  All  in  Excess  of  Fixed  Price. 

218.  "      "   "    "      "       "       "      "         "      when  Vendor  Intervenes. 

219.  Compensation  in  Absence  of  Agreement. 


Xll  TABLE    OF    CONTENTS. 

§  282.  Silence  and  "Concealment." 

221.  "          and  Usage  Defined. 

222.  When  Custom  Binds  the  Parties. 

223.  Ignorance  of  Custom, 

224.  Proof  of  Custom. 

225.  Rules  of  Real  Estate  Boards. 

226.  Compensation  in  the  Absence  of  Agreement  or  Usage. 


Chapter  XXIII. — When  Commissions  Are  Due. 

§  227.  General  Statement. 

228.  Rule  as  to  When  Commissions  are  Due. 

229.  Requirements   of   an   Earned   Commission. 

230.  Unsupported  Agreements  to  Wait  for  Commission. 

231.  Valid   Agreements   Deferring   Payment   of   Commissions. 

232.  Contingent  Commission  Agreements. 

233.  Construction  of  Agreements  to  Wait  until  Title  is  Closed. 

234.  Deferred   Commissions   and   Vendor's   Warranty  as   to   Title. 

235.  Commissions  on  Instalment  Sales. 


PART  III.— PRINCIPAL  AND  AGENT. 
Chapter  XXIV. — Principal's  Relations  to  Agent. 

§  236.  General  Statement. 

237.  Principal  May  Employ  Several  Brokers. 

238.  Negotiations  by  Principal. 

239.  Exclusive  Agency. 

240.  Intervention  of  Principal. 

241.  "  "        "          after    Broker's    Failure    or    Termination 
of  Authority. 

242.  Rule  when  Broker's  Efforts  Fail. 

Chapter  XXV. — Agent's  Relations  to  Principal. 

§  243.  General   Statement. 

244.  Agent's  Responsibility  to  Principal. 

245.  Agent  Must  Act  in  Interest  of  Principal. 

246.  Agent's  Duty  of  Faithful  Service. 

247.  Agent  Must  Not  Exceed  Authority. 

248.  "          "     Disclose  Information. 

249.  Agent's  Power  to  Make  and  Endorse  Negotiable  Paper. 

250.  "        Liability  for  Conversion  of  Money. 


TABLE    OF    CONTENTS.  X1H 

Chapter  XXVI. — Liability  of  Broker  and  Principal. 

251.  General  Statement. 

252.  Misrepresentations  by  Brokers  and  Agents. 

25:5.  When    \ "i-iitliir   i>    Liable   for  Broker's  Representations. 

254.  Vendor  Liable  if  He  Accepts  Proceeds. 

255.  Principal  Bound  by  Agent's  Representations. 

256.  Acceptance  of  Proceeds  Test  of  Liability. 

257.  Fraud  of  Agent.    Pleading. 


Chapter  XXVII.— Liability  of  Principal  to  Third  Parties. 

258.  General   Statement. 

259.  Scope  of  Chapter. 

2GO.  Liability   of   Principal   for  Agent's  Wrongdoing. 

261.  who   Accepts  Benefits  of  Agent's  Acts. 

262.  "          "          "          for  Agent's  Contracts. 

263.  "          "  Undisclosed  Principal. 

264.  Notice  to  Agent  as  Notice  to  Principal. 

265.  When  Notice  to  Agent  is  Not  Notice  to  Principal. 

266.  Agent's  Knowledge   Obtained   in  Other   Transactions. 

267.  Usury  of  Agent. 


Chapter  XXVIIL— Liability  of  Broker  to  Third  Parties. 

268.  General  Statement. 

269.  Scope  of  Chapter. 

270.  Liability  of  Agent  for  Moneys  Received. 

271.  "          "        "        "    Misfeasance  and  Nonfeasance. 

272.  Agent  Liable  for  Improper  Contract. 

273.  Liability  of  the  Agent  on  Unauthorized  Contract. 

274.  Ground  of  Agent's  Liability   for  Unauthorized  Acts. 

275.  Warranty  of  Authority  to  Make  Contract. 

276.  Reason  of  Liability  of  Agent  for  Unauthorized  Acts, 

277.  Liability  of  Agent  Acting  for  Undisclosed  Principal. 

278.  Unlawful  Intrusion  on  Real  Property. 


PART     IV.— FRAUD. 

Chapter  XXIX.— What  Constitutes  Fraud.    Acts  Not  Usually  Considered 

Fraudulent 

§  279.     General  Statement. 

280.  What  is  Fraud? 

281.  Broker's  Frauds. 


XIV  TABLE   OF   CONTENTS. 

§  220.  Custom  as  Part  of  the  Agreement. 

283.  Requirements  as  to  Disclosure. 

284.  Fraudulent  Concealment  by  the  Purchaser. 

285.  Promises,  Hopes,  etc. 

286.  "  and   False   Representations. 

287.  Opinions;   Expressions  of  Value. 

288.  Assertion  of  Value,  Though  False,  Not  Ordinarily  Fraudulent. 

289.  Opinions  Amounting  to  Affirmations  of  Fact. 

290.  Assertions  and  Opinions  Fraudulent  in  Intent. 

291.  When  Expression  of  Opinion  is  Fraudulent. 


Chapter  XXX. — What  Constitutes   Fraud.    Acts   Usually   Considered 

Fraudulent. 

§  292.    General  Statement. 

293.  Representation  that  Certain  Price  Had  Been  Offered. 

294.  "  as  to  Value  and  Price  Paid  for  Property. 

295.  Representations  as  to  Rentals. 

296.  "     "     Improvements. 

297.  "  "    "    Situation    of    Property. 

298.  "    "    Mortgages  on   Property. 

299.  Representation  that  Others  Want  the   Property. 

300.  Representations  as  to  Title  of  Vendor. 


Chapter  XXXI.— Negligence  on  Part  of  Vendee. 

301.  General  Statement. 

302.  May  Vendee  Rely  Upon  Statements  of  Vendor? 

303.  Vendor  Not  Ordinarily  Required  to  Volunteer  Information. 

304.  Vendee  Required  to  Exercise  Caution. 

305.  Degree  of  Caution  Required  by  Vendee. 

306.  Vendee  Must  Exercise  Ordinary  Caution. 

307.  Negligence  No  Bar  to  Relief  in  Cases  of  Wilful  Fraud. 


Chapter  XXXII. — Waiver.    Rescission.    Remedies. 

308.  General  Statement. 

309.  Waiver  of  the  Fraud. 

310.  What  Constitutes  Waiver  of  Fraud. 

311.  Full  Knowledge  of  Fraud  Not  Necessary  to  Waiver. 

312.  Recitals  in  Contract  Do  Not  Operate  as  Waiver  of  Fraud. 

313.  Remedies  for  Fraud.    Measure  of  Damage. 

314.  "  "        "          Action  to  Rescind. 

315.  Liability  on  Contract  in  Case  of  Fraud. 


TABLE   OF   CONTENTS.  XV 


§  316.  Rescission. 

317.  Offer  to  Restore. 

318.  Pleading  Fraud. 

319.  "      Committed  by  More  than  One. 

320.  Proof  of  Fraud  at  Law  and  in  Equity. 


Chapter  XXXIII. — Criminal  Frauds. 

§  321.  General  Statement. 

322.  Obtaining  Property  by  False  Pretenses. 

323.  Compelling  Execution  of  Instrument. 

324.  Definition  and  Punishment  of  Conspiracy. 

325.  Corrupt  Influencing  of  Agents;  Unlawful  Agreements  of  Agent. 


PART   V.— PROCEDURE. 
Chapter  XXXIV.— Pleading. 

§  326.  General  Statement. 

327.  Scope  of  Chapter. 

328.  Complaint  for  Broker's  Commissions. 

329.  Methods  of  Pleading. 

330.  Pleading  Legal  Effect. 

331.  the  Facts  Constituting  the  Cause  of  Action. 

332.  Action  Based  upon  a  Contract. 

333.  Facts  to  be  Stated. 

334.  Full  Performance  and  Excuse  for  Performance. 

335.  Pleading  Special  Agreements 

336.  Matters  of  Defense. 

337.  Pleading  Acts  Done  by  Agent. 


Chapter  XXXV.— Interpleader. 

§  338.  General   Statement. 

339.  Double  Claims  for  Commission. 

340.  Nature  of  Interpleader. 

341.  Interpleader   Permissible  in   Broker's   Commission   Cases   in   Some 

States. 

342.  Interpleader  Not  a  Universally  Recognized  Right. 

343.  Method  of  Procedure. 

344.  Interpleader  When  Action  Brought  in  Court  Having  no  Jurisdic- 

tion to  Interplead. 

345.  Requisites  of  Interpleader. 

346.  Interpleader  Makes  Actions  at  Law  Equity  Suits. 


XVI  TABLE   OP   CONTENTS. 

PART  VI.— CONTRACTS  FOR  SALE  OF  REAL  ESTATE. 
Chapter  XXXVL— Agreements  Relating  to  the  Sale  of  Real  Estate. 

§  347.  Method  of  Presentation. 

348.  Nature  of  a  Sale. 

349.  Usual  Methods  of   Concluding  a   Sale. 

350.  Oral  Agreements  and  Informal  Written  Agreements. 

351.  Options  on  Real  Estate. 

352.  Essential  Features  of  a  Contract  for  Sale  of  Real  Property. 

353.  Parties  to  the  Contract. 

354.  Execution  of  Contract  of  Sale. 

Chapter  XXXVII.— Subject  Matter  of  Contracts  for  Sale  of  Real  Estate. 

§  355.     Drafting  Contract   for  Sale  of  Real  Estate. 
356    Description  of  Property  in  Contracts  of  Sale. 

357.  Statement  as  to  Ownership  in  Adjacent  Streets  or  Highways. 

358.  of  Gross  or  Acreage  Price. 

359.  "  Easements,  Negative  Easements,  Encroachments,  etc. 

360.  Leases  of  Property  Held  under  Contract  of  Sale. 

361.  Price  and  Manner  of  Payment. 

362.  Suburban  Property. 

363.  New  Buildings. 

364.  Time  for  Delivery  of  Deed. 

365.  Fixtures. 

366.  Approval  Clause. 

367.  General  Provisions. 


PART  VIL— SCHEDULES  AND  FORMS. 

Chapter    XXXVIII.— Brokers'    Rules.    Schedules    of    Fees,    Charges    and 

Commissions. 
Form. 

1.  Schedule  of  Charges  and  Commissions.    New  York  City. 

2.  "        "    Salesroom    Fees    and    Commissions   at   Auctions.    New 
York  City. 

3.  Schedule  of  Fees,  Charges  and  Commissions.    Brooklyn,  N.  Y. 

4.  "        "    Salesroom  Fees  and  Commissions  at  Auctions.    Brook- 
lyn, N.  Y. 

5.  Rental  and  Management  Charges.    Chicago,  111. 

6.  Charges  for  Ground  Leases.    Chicago,  111. 

7.  Commissions  on  Sales.    Chicago,  111. 


TABLE   OF   CONTENTS.  Xvii 

Form. 

8.  Loan  Charges  and  Valuation  Fees.    Chicago,  111. 

9.  Brokers'  Rules,  Fees,  Charges  and  Commissions.    Cook  County,  111. 

10.  Schedule   of   Fees,   Charges   and   Commissions.     Philadelphia,   Pa. 

11.  "      "  St.  Louis,  Mo. 

12.  Rules  and  Regulations  of  the  St.  Louis  Real  Estate  Exchange. 

13.  Schedule  of  Fees,  Charges  and  Commissions.     Boston,  Mass. 

14.  Commission  Rate  Schedule.     Jersey  City,  N.  J. 

15.  Schedule  of  Brokers'  Commissions.     Denver,  Colo. 

16.  Schedule  of  Fees,  Charges  and  Commissions.     San  Francisco,  Cal. 

Chapter  XXXIX.— Forms  of  Contracts  for  Sale  of  Real  Estate. 

Form. 

17.  Contract  of  Sale.    New  York  City.. 

18.  "      "        Cook  County,  111. 

19.  "          "      "        Chicago,  111. 

20.  "          "      " 

21.  "          "      "        Philadelphia,  Pa. 

22.  "          "      "        Boston,  Mass. 

23.  Agreement  for  Sale  of  Property.    Baltimore,  Md. 

24.  Contract  of  Sale.    New  Jersey.     (Short  Form.) 

25.  "          "      " 

26.  Agent's   Sale  Contract.    Chicago,  111. 

27.  Contract  for  Sale  of  Restricted  Lots  on  Installment  Plan. 

28.  "       "      "   Lots  on  Installment  Plan. 

29.  Assignment  of  Contract.    Informal. 

30.  Contract  for  Exchange  of  Properties. 

31.  "  Chicago,  HL 

32.  Deed  and  Money. 

33.  Assignment  of  Contract. 

34.  "  "          "  Without  Recourse. 

35.  Demand  for  Performance  of  Contract  of  Sale. 

Chapter  XL. — Miscellaneous  Forms. 
Form. 

36.  Authority  to  Broker  to  Sell. 

37.  Exclusive  Agency  Contract.    Chicago,  HI. 

38.  Authority  to  Broker  to  Exchange  Property. 

39.  Salesman's  Contract. 

40.  Application  for  Loan.    New  York  City. 

41.  "  "         "        Chicago,  HI. 

42.  "  "         "        St.  Louis,  Mo. 

43.  "  "         "        Baltimore,  Md. 

44.  Encroachment  Agreement. 
45. 


XV1H  TABLE    OF    CONTENTS. 

Chapter  XLI. — Forms  for  Pleading. 
Form. 

46.  Complaint    for    Recovery    of    Broker's    Commissions.     Short.     (First 

Form.) 

47.  Complaint  for  Recovery  of  Broker's  Commissions.     Short.     (Second 

Form.) 

48.  Complaint  for  Recovery  of  Broker's  Compensation.     (Two  Counts.) 

49.  Motion  for  Interpleader  in  New  York  City  Municipal  Court. 

50.  "  "     Interpleader.    Supporting  Affidavit. 

51.  Order  of  Interpleader. 

52.  Complaint  after  Interpleader. 


THE  LAW  OF  REAL  ESTATE 
BROKERS. 


PART   I.— POWERS,  AUTHORITY  AND 
RIGHTS  OF   BROKER 


CHAPTER   I. 
INTRODUCTORY. 

§  1.    Definition  of  Real  Estate  Broker. 

*  *  Real  estate  brokers  are  those  who  negotiate  between 
the  buyer  and  seller  of  real  property,  either  finding  a 
purchaser  for  one  desirous  to  sell,  or  vice  versa;  they 
also  manage  estates,  lease  or  let  property,  collect  rents, 
and  negotiate  loans  on  bonds  and  mortgages."1 

§  2.    Application  of  Term. 

While  in  one  case2  it  was  said  that  the  class  of  per- 
sons who  are  employed  by  owners  of  lands  to  find  a  pur- 
chaser for  them,  or,  by  those  desirous  of  purchasing,  to 
procure  a  vendor  for  them,  are  not  in  any  legal  or  proper 
sense  brokers,  it  has  been  stated,  more  recently,  that  the 
term  broker  is  properly  applied  to  a  middleman.3  But 
whatever  technical  objection  there  may  be  to  the  use  of 

»4  Am.  ft  Eng.  Ency.  of  Law   (2nd  Ed.),  962. 

•  Rowe  v.  Stevens,  35  N.  Y.  Super.  Ct.  (3  J.  &  S.)  189  (1873);  aff'd,  53  N.  Y. 
021  (1873). 

•Southack  v.   Lane,   23  Misc.   515   (N.   Y.   1898). 

19 


20  POWERS,    AUTHORITY   AND   RIGHTS    OF   BROKER. 

the  word  "broker"  in  such  case,  it  remains  the  actual 
fact  that  the  term  "real  estate  broker"  is  now  used  by 
jurist,  lawyer  and  layman  alike,  to  denote  the  agent  who 
acts  either  for  the  purchaser  or  seller,  or  both,  in  nego- 
tiating the  sale  of  real  estate,  or  in  any  of  the  capacities 
embraced  within  the  above  definition. 


§  3.    Functions  of  a  Broker. 

"A  broker  is  an  agent  primarily  to  establish  privity 
of  contract  between  two  parties."4  "A  broker  is,  in 
general,  one  who  buys  or  sells  property  for  another. 
Eeal  estate  brokers  are  agents  for  the  sale  and  purchase 
of  real  property. " 5  As  stated  in  one  of  the  leading  cases 
on  the  subject  of  brokers,6  quoting  from  Story:  "  '  The 
true  definition  of  a  broker  seems  to  be  that  he  is  an  agent 
employed  to  make  bargains  and  contracts  between  other 
persons  in  matters  of  trade,  commerce  or  navigation  for 
a  compensation  commonly  called  brokerage/  Story 
Agency,  §  28,  p.  25.  In  Pott  v.  Turner,  6  Bing.  702,  706,  a 
broker  is  more  tersely  and  quite  accurately  described  as 
'  one  who  makes  a  bargain  for  another  and  receives  a 
commission  for  so  doing. '  " 7 

And  so  it  is  said  that  the  ordinaryprinciples  governing 
the  relation  of  principal  and  agent  apply  to  real  estate 
brokers.8  In  one  case9  it  was  said,  however,  that  "  a 
broker  is  regarded  as  a  middleman,  and  not  as  an  agent 
in  whom  peculiar  trust  and  confidence  are  placed." 10 

*  Clark  on  Contracts,   736. 

B  Law  of  Contracts,  Special  Topics,  West  Pub.  Co.    (1896),  Topic  "Brokers,"  p.  2. 

•Sibbald  v.   Bethlehem  Iron  Co.,   83  N.  Y.  378    (1880). 

i  See  also  Little  Rock  v.  Barton,  33  Ark.  444-449  (1878);  Kramer  v.  Blair,  88 
Va.  463  (1891);  McCullough  v.  Hitchcock,  71  Conn.  404  (1899). 

As  to  whether  a  person  making  an  isolated  sale  is  a  broker,  see  O'Neil  v.  Sinclair, 
153  111.  525  (1894). 

8  Martin  v.  Bliss,  57  Hun  157  (N.  Y.  1890)  ;  Low  v.  Woodbury,  107  App.  Div. 
298  (N.  Y.  1905);  Kingsley  v.  Wheeler,  95  Minn.  362  (1905).  See  also  Wilkinson 
v.  McCullough,  196  Pa.  St.  208-209  (1900). 

•  Vinton   v.    Baldwin.   88   Ind.    105    (1882). 

10  Citing  Alexander  v.  Northwestern  Un.,  57  Ind.  466 ;  Rowe  v.  Stevens,  53  N.  Y. 
261 ;  Rupp  v.  Sampson,  16  Gray  398 ;  Redfield  v.  Tegg,  38  N.  Y.  212 ;  Barry  T.  Schmidt, 
27  Alb.  L.  J.  297. 


INTRODUCTORY.  21 

§  4.    Definition  of  Terms. 

The  "  principal  "  is  one  for  whom  the  agent  acts,  and 
the  term  "  principal  "  is  hereinafter  used  interchange- 
ably with  "owner,"  "seller,"  and  "vendor."  The 
word  "  vendor  "  signifies  the  seller,  while  "  vendee  " 
signifies  the  purchaser. 


CHAPTER   II. 

WHO    MAY    ACT    AS    BROKER.    LICENSE    RE- 

QUIREMENTS. 

§  5.    General  Statement. 

Any  person  may  act  as  a  broker,  including  minors 
and  married  women.  (§§  6-8.)  Partnerships  and  busi- 
ness corporations  may  likewise  act  as  brokers.  (§§9, 
10.)  In  some  localities  a  license  is  required  for,  or  a  tax 
is  imposed  on,  the  right  to  do  business  as  a  real  estate 
broker.  (§11.) 

§  6.    Married  Women  as  Brokers. 

In  general,  any  person  may  act  as  a  real  estate  broker. 
In  New  York,  a  married  woman  may  act  as  such  broker, 
for  the  law  in  New  York  State  gives  a  married  woman  all 
the  rights  in  respect  to  property,  real  or  personal,  and  the 
acquisition,  use,  enjoyment  and  disposition  thereof,  and 
the  same  power  to  make  contracts  in  respect  thereto  with 
any  person,  including  her  husband,  and  to  carry  on  any 
business,  trade  or  occupation,  and  to  exercise  all  powers 
and  enjoy  all  rights  in  respect  thereto  and  in  respect  to 
her  contracts,  and  be  liable  on  such  contracts,  as  if  she 
were  unmarried.1  Nor  does  her  contract  bind  her  hus- 
band or  his  property.2  The  same  is  almost  universally 
true  throughout  the  United  States.  (See  next  section.) 

i  N.  Y.   Cons.   Laws,   Ch.   14,  §  51,  formerly  §  21   Dom.   Rel.  Law. 
*  N.  Y.  Cons.  Laws,  Ch.  14,  §  55,  formerly  §  25  Dom.  Bel.  Law. 

22 


WHO   MAY   ACT   AS   BROKER.  23 

§  7.    Married  Women  as  Brokers.    State  Laws. 

In  the  following  states  and  territories  a  married  woman 
may  contract  on  her  own  account,  or  carry  on  business  on 
her  own  account:  Alabama;  Alaska;  Arizona;  California; 
Colorado;  Connecticut;3  Delaware  (as  to  contracts  "  nec- 
essary to  be  made  with  respect  to  her  own  property  ")  ;4 
District  of  Columbia;5  Florida  (but  only  after  application 
to  the  court);  Georgia;  Hawaii  (except  she  cannot  make 
contract  for  personal  service  without  written  consent  of 
husband);6  Idaho;  Illinois  (but  she  cannot  carry  on  a 
partnership  business  without  the  consent  of  her  husband, 
unless  he  has  abandoned  her  or  is  insane  or  confined  in 
the  penitentiary);7  Indiana;8  Iowa;  Kansas;9  Kentucky; 
Maine;  Maryland;  Massachusetts  (certificate  should  be 
filed);  Michigan;  Minnesota;10  Mississippi;  Missouri; 
Montana  (on  application  to  court);  Nebraska;  Nevada 
(after  order  by  court);  New  Hampshire;  New  Jersey;11 
North  Carolina  (by  certificate  filed);12  North  Dakota; 
Ohio;13  Oklahoma;  Oregon;  Pennsylvania  (with  excep- 
tions); Rhode  Island;  South  Carolina;14  South  Dakota; 
Utah;  Vermont;  Virginia;  Washington; 15  West  Virginia 
(to  some  extent) ;  Wisconsin  (to  a  limited  extent) ; 18  and 
Wyoming.  But  in  some  states  the  right  of  a  married 
woman  to  contract  on  her  own  account  or  to  carry  on  busi- 
ness on  her  own  account  is  limited  even  more  than  herein- 
before stated,  or  is  withheld  altogether,  as  in  Louisiana 
(not  without  authority  of  husband,  except  when  she  is  a 
public  merchant),  Tennessee  and  Texas. 

General   Statutes    (1902),   §   593. 
14    Delaware    Laws,    Ch.    550. 
Code  of    the   District   of   Columbia,    §  1155. 
Revised    Laws    of    Hawaii,    §  2252. 
Hurd's   Revised    Statutes,    §    1242. 
Act    of    1881. 

General    Statutes    (1905).    par.    4214. 
"Revised   Laws   (1905),   §§  3605-3608. 

1  General     Statutes,     p.     2014. 

2  Revised    Laws    (1905),    §2112. 

s  Revised    Statutes,    §§    3110-3114. 

«  Code    of    Laws    (1902),    Vol.     1.    §2666. 

5  1    Ball.    C.    &    S.,    §§4493,    4504. 

«  See  Statutes,    §   2344. 


24  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

§  8.    Minors. 

And  so  any  person  under  legal  age  may  act  as  a  broker. 
At  least,  a  minor  acting  as  broker  could  recover  any 
earned  commission,  for  it  is  the  minor  only,  or  on  his 
death  his  representatives,  who  can  take  advantage  of  his 
infancy.17  The  person  employing  such  minor  broker  may, 
however,  have  some  difficulty  where  any  obligations  arise 
on  the  broker's  part  which  are  contract  obligations,  for 
such  the  minor  could  avoid.18  But  for  any  tortious  acts, 
such  as  fraud,  conversion,  and  the  like,  the  minor  would 
be  liable  the  same  as  an  adult.19 

§  9.    Partnerships. 

A  partnership  may  act  as  agent.  An  authority  by  a 
principal  to  two  persons  not  partners  to  do  an  act  is  joint, 
and  the  act  must  be  concurred  in  by  both.  When  a  firm 
is  appointed  to  an  agency,  this  rule  would  necessarily  be 
modified  to  the  extent  that  either  member  of  the  firm 
could  do  any  act  within  the  scope  of  the  agency  just  as 
he  could  perform  any  other  partnership  act.  By  appoint- 
ing a  partnership  it  would  be  implied  that  the  authority 
was  joint  and  several.  But  upon  dissolution  of  the  firm 
such  an  agency  would  cease.20 

§  10.    Corporations. 

A  business  corporation  may,  in  general,  act  as  a  real 
estate  agent,  if  it  is  within  the  scope  of  its  powers. 

§  11.    License  or  Tax  on  Right  to  Act  as  Broker. 

In  some  localities  a  license  is  required  for,  or  a  tax  is 
imposed  on,  the  right  to  do  business  as  a  real  estate 

"  Clark   on    Contracts,    242. 

"2  Abb.  Cyc.  Dig.  (N.  Y.),  839;  15  Id.,  1557;  27  Am.  Dig.  (Cent.  Ed.),  p. 
1138;  16  Am.  &  Eng.  Ency.  of  Law  (2nd  Ed.),  p.  285. 

19  2  Abb.  Cyc.  Dig.  (N.  Y.),  846;  15  Id.,  1558.  See  Stone  v.  Rabinowitz,  45 
Misc.  405  (N.  Y.,  1904),  as  to  conversion. 

»Martine  v.  Int.  Life  Ins.,  53  N.  Y.  339  (1873);  McLaughlin  v.  Wheeler,  1 
S.  D.  514  (1891). 


WHO    MAY   ACT   AS   BROKER.  25 

broker.21  It  woulH  be  impossible  to  give  any  authorita- 
tive discussion  of  this  subject,  since  in  some  instances  the 
license  or  tax  is  imposed  by  municipal  ordinance  and  in 
some  by  general  statutes.  All  of  these  are  subject  to  such 
frequent  change  or  other  vicissitude,  that  a  presentation 
of  them  would  be  of  little  value  for  permanent  use  and 
the  labor  of  gathering  even  an  incomplete  list  would  be 
quite  an  impossible  task.  We  therefore  reluctantly  con- 
tent ourselves  with  resorting  to  the  well-worn  suggestion 
that  the  local  ordinances  or  statutes  should  in  each  case 
be  consulted.22  In  Texas  it  is  held  that  the  failure  to 
pay  the  occupation  tax  and  to  obtain  a  license  does  not 
preclude  a  recovery  of  commissions.23 


21  A  real  estate  agent  who  does  not  engage  In  the  "  purchase  or  sale  of  securities  " 
Is  not  required  by  the  United  States  Revenue  Laws  to  pay  a  tax.  Rounds  v.  Alee,  110 
Iowa  348  (1902). 

23  The  following  authorities  which  bear  on  the  subject  may  be  of  some  yalue : 
Commonwealth  v.  Black  Co.,  34  Pa.  Super.  Ct.  431  (1907)  ;  Wiltse  v.  State,  55  Tenn. 
544  (1873);  Prince  v.  Eighth  St.  Church,  20  Mo.  App.  332  (1886);  Braun  v.  City 
of  Chicago,  110  111.  186  (1884)  ;  Little  Rock  v.  Barton,  33  Ark.  436  (1878)  ;  Ober 
v.  Stephens,  54  W.  V.  354  (1903);  O'Neil  v.  Sinclair,  153  111.  525  (1894);  Marker  v. 
Tough,  98  Pnc.  792  (Kans.  1908)  ;  Denning  v.  Yount,  50  L.  R.  A.  103  (Kans.  1900). 
See  also  §§  14-22  infra. 

23  Watkins  Co.  v.  Thetford,  96  S.  W.  72   (Tex.   1906). 


CHAPTER  III. 
WRITTEN  AND  ORAL  AUTHORITY  OF  BROKER. 

§  12.    General  Statement. 

Generally,  the  broker's  authority  to  negotiate  the  sale 
or  purchase  of  real  estate,  loans  thereon,  or  the  renting 
thereof,  need  not  be  in  writing  (§§  13-26),  except  that,— 

(1)  The  statutes  in  some  jurisdictions  require  written 
authority.     (§§  14-22.) 

(2)  An  authority  to  a  broker  which,  by  its  terms,  is 
not  to  be  performed  within  a  year,  must  be  in  writing. 
(§§  24-26.) 

§  13.    Form  of  Authorization. 

As  a  general  rule,  the  broker's  authority  to  negotiate 
a  sale,  a  purchase  or  exchange  of  real  estate,  mortgage 
loan  or  lease,  need  not  be  in  writing.1  The  requirement 
of  the  Statute  of  Frauds  in  some  states  that  a  contract 
for  the  sale  of  real  estate  must  be  in  writing,  subscribed 
by  the  vendor  or  his  agent  thereunto  authorized  in  icr it- 
ing,2  must  not  be  confused  with  the  proposition  as  to 
whether  the  agent's  authority  to  negotiate  a  sale  should 
be  in  writing.  As  was  said  in  one  case,  "  a  person  may 
employ  a  broker  or  agent  to  negotiate  a  sale  of  real  es- 
tate without  giving  him  written  authority  so  to  do.  As 
between  the  vendor  and  vendee,  the  authority  of  the 

*  Fisher  Co.   v.    Woods.    187   N.   Y.   90    (1907):    Waterman    R.   E.    Exchange   v.    Ste- 
phens, 71  Mich.  104   (1888)  ;  Griffith  v.  Woolworth.  28  Neb.   717    (1890)  :    (See  also  §   20 
as  to  present   Nebraska   statute);   Jackson   v.    Higgins,    70   N.    H.    637    (1900);   Lamb   v. 
Baxter.    130  N.   C.   67    (1902)  ;   McLaughlin   v.   Wheeler,    1    S.   D.   497    (1891).     See  also 
§§  24-26   infra  as   to   agreements  not   to   be  performed   within   a   year. 

*  See   §§  31-37   infra. 

26 


WRITTEN    AND    ORAL    AUTHORITY    OF    BROKER.  27 

agent  of  the  vendor  to  sign  the  contract  of  sale  must  be 
in  writing,3  but  the  rule  goes  no  further." 4  But  in  some 
jurisdictions  the  statutes  require  written  authority  in  the 
broker,  either  to  negotiate  the  sale  or  exchange  of  real 
property,  or  to  procure  a  loan  upon  it.  There  may,  of 
course,  also  be  local  regulations  where  there  are  no  state 
statutes,  but  with  the  extent  or  validity  of  such  local 
regulations  this  chapter  cannot  assume  to  deal.  The 
following  sections  contain  the  statute  of  each  of  several 
representative  states. 

§  14.    New  York;  Authority  to  Negotiate  Sale. 

Chapter  128  of  the  New  York  Laws  of  1901,  which 
went  into  effect  September  1,  1901,  and  became  §  640d 
of  the  then  Penal  Code,  provided  that,  "  In  cities  of  the 
first  and  second  class,5  any  person  who  shall  offer  for 
sale  any  real  property  without  the  written  authority  of 
the  owner  of  such  property,  or  of  his  attorney  in  fact, 
appointed  in  writing,  or  of  a  person  who  has  made  a 
written  contract  for  the  purchase  of  such  property  with 
the  owner  thereof,  shall  be  guilty  of  a  misdemeanor. ' ' 

The  lower  and  intermediate  appellate  courts  of  New 
York  were  divided  as  to  the  legality  of  this  statute. 
Some  held  that  the  broker  could  not  recover  commis- 
sions unless  his  authority  to  sell  was  in  writing,6  while 
others  held  that  the  broker  could  recover  notwithstand- 
ing his  authority  was  not  in  writing.7  Then,  too,  dis- 
tinctions were  drawn,  and  it  was  held  that  the  stat- 
ute did  not  apply  where  a  broker  was  employed  to 
sell  the  interest  of  an  intending  purchaser  under  a  con- 

3  This  is  a  requirement  of  the  Illinois  statute  of  frauds  which  provides  that  an 
agent's  authority  to  sign  a  contract  must  be  in  writing.  See  statute  quoted  in  §  36 
infra. 

<  Monroe    v.    Snow.    131    111.    135    (1891). 

B  The  New  York  State  Constitution  defines  such  cities — Art.   XII,  §  2. 

MVhlteley  v.  Terry.  39  Misc.  93  (N.  Y.  1902);  83  App.  Div.  197  (N.  Y.  1903); 
Cohen  v.  Boccuzzl.  42  Misc.  544  (N.  Y.  1904). 

T  Grossman  v.  Caminez.  79  App.  Div.  15  (N.  Y.  1903)  ;  Cody  v.  Dempsey,  86 
App.  Div.  335  (N.  Y.  1903). 


28  POWERS,    AUTHORITY    AND    RIGHTS    OF    BROKER. 

tract  for  the  sale  of  real  estate.8  Finally,  however,  the 
Court  of  Appeals  of  New  York,  which  is  the  court  of  last 
resort  in  that  State,  declared  the  law  unconstitutional,9 
the  law  itself  was  repealed  by  Chapter  516,  Laws  of  1906, 
May  21,  1906,  and,  apparently,  that  there  might  be  no 
question  about  it,  the  law  was  again  repealed  by  the  new 
Penal  Law  of  1909.10  Written  authority  to  negotiate  a 
sale  is  therefore  no  longer  necessary  in  New  York  State. 

§  15.    New  York;  Authority  to  Negotiate  Loan. 

"With  respect  to  a  broker's  authority  to  negotiate  a 
loan  in  New  York,  a  statute  similar  to  that  mentioned  in 
the  preceding  section  was  also  found  in  Chapter  128  of 
the  New  York  Laws  of  1901,  in  effect  September  1,  1901, 
and  this  statute  became  §  640e  of  the  then  Penal  Code. 
It  provided  as  follows :  ' '  In  cities  of  the  first  and  second 
class,11  any  person  who  shall  make  application  to  any 
other  person,  or  to  any  corporation,  for  a  loan  upon  any 
real  property,  without  the  written  authority  of  the  owner 
of  such  real  property,  or  of  his  attorney  in  fact,  ap- 
pointed in  writing,  or  of  a  person  who  has  made  a  written 
contract  for  the  purchase  of  such  property  with  the 
owner  thereof,  shall  be  guilty  of  a  misdemeanor. ' ' 

While  Chapter  516  of  the  Laws  of  1906  assumed  to 
repeal  the  whole  of  Chapter  128  of  the  Laws  of  1901,  it 
referred  specifically  only  to  §  640d  of  the  Penal  Code, 
but  whatever  there  might  be  of  doubt  as  to  whether 
§  640e  of  the  Penal  Code  was  thereby  repealed  is  set  at 
rest  by  the  new  Penal  Law,12  which  repealed  Chap- 
ter 128  of  the  Laws  of  1901  in  its  entirety.  Then,  how- 
ever, by  §  2039  of  the  Penal  Law  aforesaid,  the  provision 
was  re-enacted  in  exactly  the  same  words  as  former 

s  Levy    v.    Timble,    47    Misc.    394    (N.    Y.    1905). 

•  Fisher   Co.    v.    Woods,    187    N.    Y.    90    (1907). 

10  N.    Y.    Laws   of   1909,    Ch.    88 ;    Cons.    Laws,    Ch.    40. 

u  The  State  Constitution  defines  such  cities  In  Art.  XII,  §  2. 

«N.    Y.    Laws  of   1909,    Ch.    88;   Cons.    Laws,   Ch.   40. 


WRITTEN    AND   ORAL   AUTHORITY    OF   BROKER.  29 

§  640e  of  the  Penal  Code,  above  given.  But  does  not  this 
section  of  the  Penal  Law  offend  the  Constitution  as  did 
§  640d  of  the  former  Penal  Code!  13 

§  16.    New  Jersey;  Authority  to  Sell  or  Exchange. 

In  New  Jersey  the  statute  provides,  * '  That  no  broker 
or  real  estate  agent,  selling  or  exchanging  land  for  or 
on  account  of  the  owner,  shall  be  entitled  to  any  com- 
mission for  the  sale  or  exchange  of  any  real  estate,  un- 
less the  authority  for  selling  or  exchanging  such  land  is 
in  writing,  and  signed  by  the  owner  or  his  authorized 
agent,  and  the  rate  of  commission  on  the  dollar  shall 
have  been  stated  in  such  authority."14  It  applies  to 
one  who  makes  only  an  occasional  sale  as  well  as  to 
brokers.15 

§  17.    California;  Authority  to  Purchase  or  Sell. 

In  California  the  statute  reads:  "  The  following  con- 
tracts are  invalid,  unless  the  same  or  some  note  or  memo- 
randum thereof  be  in  writing  and  subscribed  by  the 
party  to  be  charged,  or  by  his  agent:  6.  An 

agreement  authorizing  or  employing  an  agent  or  broker 
to  purchase  or  sell  real  estate  for  compensation  or  a 
commission. ' ' 16 

§  18.    Missouri;  Authority  to  Sell. 

In  Missouri  the  statute  provides : ' '  In  cities  of  300,000 
inhabitants  or  more,  any  person  who  shall  offer  for  sale 
any  real  property  without  the  written  authority  of  the 
owner  of  such  property,  or  of  his  attorney-in-fact,  ap- 
pointed in  writing,  or  of  a  person  who  has  made  a  writ- 
is  see  Fisher  Co.  v.  Woods.  187  N.  Y.  90  (1907). 

14  General   Statutes,    N.    J.    (Ed.    1709-1895),   Title    "Frauds   &    Perjuries,"   §10,    p. 
1604.     See  Lelmbach   v.   Regner,   70  N.   J.   L.   608    (1904). 
«  Stout   v.    Hunphrey.    69    N.    J.    L.    436    (1903). 

"Cal.  Civil  Code,  §1624.  See  McGeary  v.  Satchwell,  129  Cal.  389  (1900), 
where  authorities  are  cited. 


30  POWERS,   AUTHORITY  AND  RIGHTS  OF   BROKER. 

ten  contract  for  the  purchase  of  such  property,  with  the 
owner  thereof,  shall  be  deemed  guilty  of  a  misdemeanor 
and  fined  in  a  sum  of  not  less  than  $10  nor  more  than 
$300.  "17 

§  19.    Missouri;  Authority  to  Negotiate  Loan. 

With  respect  to  negotiating  a  loan,  the  Missouri  stat- 
ute provides :  * '  In  cities  of  300,000  inhabitants  or  more, 
any  person  who  shall  make  application  to  any  other  per- 
son, or  to  any  corporation,  for  a  loan  upon  any  real  prop- 
erty without  the  written  authority  of  the  owner  of  such 
real  property,  or  of  his  attorney-in-fact,  appointed  in 
writing,  or  of  any  person  who  has  made  a  written  con- 
tract for  the  purchase  of  such  property  with  the  owner 
thereof,  shall  be  deemed  guilty  of  a  misdemeanor  and 
fined  in  a  sum  not  less  than  $10  nor  more  than  $300." 18 

§  20.    Nebraska;  Authority  to  Sell. 

In  Nebraska  the  statute  reads:  "  Every  contract  foi 
the  sale  of  lands,  between  the  owner  thereof  and  any 
broker  or  agent  employed  to  sell  the  same,  shall  be  void, 
unless  the  contract  is  in  writing  and  subscribed  by  the 
owner  of  the  land  and  the  broker  or  agent,  and  such  con- 
tract shall  describe  the  land  to  be  sold,  and  set  forth  the 
compensation  to  be  allowed  by  the  owner  in  case  of  sale 
by  the  broker  or  agent." 19  In  Covey  v.  Henry,  71  Neb. 
118  (1904),  at  pages  123,  124,  the  court  comments  as  fol- 
lows: "  The  section  of  the  statute  above  set  out  is  plain 
and  unambiguous.  The  reasons  which  impelled  the  legis- 
lature to  pass  that  act  are  well  known  to  the  courts  and 
the  profession  generally.  Innumerable  suits  were  being 

"Mo.  Laws  of  1903  (H.  B.  509),  p.  161.  §  1.  See  Real  Estate  &  Trust  Co.  v. 
Hartman.  128  Mo.  App.  233  (1907).  See  the  New  York  statute,  similar  to  this  (§  14 
supra). which  was  declared  unconstitutional. 

18  Mo.  Laws  of  1903  (H.  B.  509),  p.  161,  §  2.  See  comments  on  a  similar  statute 
of  New  York,  §  15  supra. 

"Compiled    Statutes,    Ch.    73,    §74    (Annotated    Statutes,    10258). 


WRITTEN   AND   ORAL  AUTHORITY   OF   BROKER.  31 

instituted,  from  time  to  time,  by  agents  and  brokers, 
after  the  owner  of  lands  had  sold  the  same,  claiming  a 
commission  on  the  ground  that  they  had  been  instru- 
mental in  securing  the  purchaser;  and,  in  many  cases, 
owners  of  land  were  compelled  to  pay  double  commission 
on  account  of  such  claims. ' J 

§  21.    Washington;  Authority  to  Sell  or  Purchase. 

In  the  State  of  Washington,  the  statutory  provision 
is  as  follows:  "  An  agreement  authorizing  or  employing 
an  agent  or  broker  to  sell  or  purchase  real  estate  for 
compensation  or  a  commission  "  is  void  unless  the 
1 1  agreement,  contract  or  promise,  or  some  note  or  memo- 
randum thereof,  be  in  writing,  and  signed  by  the  party 
to  be  charged  therewith,  or  by  some  person  thereunto  by 
him  lawfully  authorized. ' ' 20 

S  22.    Montana;  Authority  to  Purchase  or  Sell. 

"  An  agreement  authorizing  or  employing  an  agent 
V  broker  to  purchase  or  sell  real  estate  for  compensa- 
tion, or  a  commission,"  is  invalid,  unless  the  same,  or 
some  note  or  memorandum  thereof,  be  in  writing  and 
subscribed  by  the  party  to  be  charged,  or  his  agent.21 

§  23.    Authority  to  Collect  Rents. 

A  broker's  authority  to  collect  rents  need  not  be  in 
writing,  unless  the  authority  comes  within  the  prohibi- 
tion of  the  statutes  requiring  agreements  not  to  be  per- 
formed within  a  year  to  be  in  writing.22 

§  24.  Statute  of  Frauds  as  Affecting  Brokers. 

Reference  has  already  been  made  to  the  "  Statute  of 
Frauds."  To  present  the  subject  comprehensively  and 

» Washington  Laws  of   1905,    Ch.  58,   p.    110. 

21  Montana   Civil   Code,    §  2185. 

22  For  a  discussion  of  this  class  of  agreements,  see  §§  24-26  infra. 


32  POWERS,   AUTHORITY  AND   RIGHTS   OF   BROKER. 

yet  briefly,  we  quote  from  Clark  on  Contracts,  page  90, 
this  extract:  "  The  famous  statute  of  frauds  and  per- 
juries, 29  Car.  II,  c.  3,  was  enacted  in  England  in  1677, 
during  the  reign  of  Charles  the  Second,  and,  as  stated 
in  its  recital,  had  for  its  object  the  '  prevention  of  many 
fraudulent  practices,  which  are  commonly  endeavored 
to  be  upheld  by  perjury  and  subornation  of  perjury.' 
The  original  statute,  which  is  substantially 
followed  by  the  statutes  of  most  of  our  states,  contains 
two  sections— the  fourth  and  the  seventeenth— which 
affect  the  form  of  certain  simple  contracts.  The  fourth 
section  provides:  '  That  no  action  shall  be  brought 
whereby  to  charge  any  executor  or  administrator  upon 
any  special  promise,  to  answer  damages  out  of  his  own 
estate;  or  whereby  to  charge  the  defendant  upon  any 
special  promise  to  answer  for  the  debt,  default,  or  mis- 
carriage of  another  person ;  or  to  charge  any  person  upon 
any  agreement  made  upon  consideration  of  marriage; 
or  upon  any  contract,  or  sale  of  lands,  tenements,  or  here- 
ditaments, or  any  interest  in  or  concerning  them;  or  upon 
any  agreement  that  is  not  to  be  performed  within  the 
space  of  one  year  from  the  making  thereof;  unless  the 
agreement  upon  which  such  action  shall  be  brought, 
or  some  memorandum  or  note  thereof,  shall  be  in 
writing,  and  signed  by  the  party  to  be  charged  there- 
with, or  some  other  person  thereunto  by  him  lawfully 
authorized.'  " 

The  seventeenth  section  of  the  English  statute  is  not 
involved  in  the  present  discussion,  which  is  confined  to 
the  requirement  of  the  statute  in  its  bearing  upon  bro- 
kers, that  all  agreements  not  to  be  performed  within  a 
year  from  the  making  thereof  shall  be  in  writing. 

As  Mr.  Clark  says,  the  English  statute  has  been  sub- 
stantially followed  in  most  of  our  states,  although  in 
some  the  statute  is  materially  different.  It  would  be 
quite  beyond  the  scope  of  the  present  work  to  attempt 


WRITTEN    AND   ORAL   AUTHORITY    OF   BROKER.  33 

to  present  the  language  of  the  so-called  Statute  of 
Frauds  of  each  state.  We  shall  therefore  merely  use 
the  New  York  statute  as  a  basis  for  a  brief  discussion  of 
the  subject,  adding  such  miscellaneous  authorities  as 
will  at  least  indicate  the  general  inclination  of  the  courts 
with  respect  thereto. 

§  25.    Agreements  Not  to  be  Performed  within  a  Year. 

Three  situations  present  themselves  which  may  be 
discussed  in  view  of  the  statute  which  requires  all  agree- 
ments not  to  be  performed  within  a  year  to  be  in  writ- 
ing. First,  where  a  person  places  real  property  in  the 
hands  of  a  broker  to  collect  the  rents  and  manage  the 
property  and  fixes  no  time  as  to  the  continuance  of  the 
authority.  Second,  where  property  is  placed  in  the 
hands  of  a  broker  for  such  purposes  and  the  authority  is 
to  continue  for  more  than  a  year.  Third,  where  prop- 
erty is  placed  in  the  hands  of  a  broker  for  such  purposes 
and  the  authority  is  to  continue  for  more  than  a  year, 
or  until  the  person  shall  sell  the  property,  or  which  may 
be  terminated  upon  some  other  contingency. 

§  26.    Classification  of  Agreements  Not  to  be  Performed 
Within  a  Year. 

(a)     WHERE  No  TIME  is  FIXED. 

Where  no  time  is  fixed,  either  party  may  terminate 
the  relation  at  any  time,  and  as  the  law  is  that  "  if  the 
agreement  may,  consistently  with  its  terms,  be  entirely 
performed  within  the  year,  although  it  may  not  be  prob- 
able or  expected  that  it  will  be  performed  within  that 
time,  it  is  not  within  the  condemnation  of  the  statute," 
there  need  therefore  be  no  writing.23 

23  Kveritt  v.  N.  Y.  Eng.  Co.,  14  Misc.  580  (N.  Y.  1895)  ;  20  Misc.  548  (N.  Y. 
1897)  ;  .Tagau  v.  Goetz,  11  Misc.  380  (N.  Y.  1S95).  See  also  Warren  v.  Holbrook,  118 
N.  Y.  ^93  (1889). 


34  POWERS,    AUTHORITY   AND   RIGHTS    OF   BROKER. 

(b)  AGREEMENTS  FOR  MORE  THAN  A  YEAR. 

The  statute  provides  that  every  agreement,  promise 
or  undertaking  is  void,  unless  in  writing,  if  by  its  terms 
it  is  not  to  be  performed  within  one  year  from  the  mak- 
ing thereof.24  Under  the  New  York  statute,  the  agree- 
ment, or  note  or  memorandum  thereof,  must  be  sub- 
scribed "  by  the  party  to  be  charged  therewith,  or  by  his 
lawful  agent."25 

(c)  AGREEMENTS  FOR  MORE  THAN  A  YEAR,  BUT  TER- 

MINABLE UPON  SOME  CONTINGENCY. 

Where  the  agreement  is  to  continue  for  more  than  a 
year  from  the  time  it  is  made,  but  it  is  also  agreed  that 
either  party  may  terminate  it  within  the  year,  or  where 
the  agreement  is  to  continue  for  more  than  a  year  or 
until  the  happening  of  an  event  which  may  transpire  be- 
fore the  end  of  the  year,  it  need  not  be  in  writing.26 

In  Eiseman  v.  Schneider,  60  N.  J.  L.  292,  293  (1897), 
it  was  said:  "  As  early  as  the  case  of  Peter  v.  Compton, 
Skin.  353,  the  great  majority  of  the  judges  declared  that 
'  where  the  agreement  was  to  be  performed  upon  a  con- 
tingent, and  it  does  not  appear  within  the  agreement 
that  it  is  to  be  performed  after  the  year,  there  a  note 
in  writing  is  not  necessary,  for  the  contingent  might  hap- 
pen within  a  year;  but  where  it  appears  by  the  whole 
tenor  of  the  agreement  that  it  is  to  be  performed  after 
a  year,  there  a  note  is  necessary;  otherwise,  not.' 

"This  has  been  the  generally  accepted  rule  since 
that  case  was  decided. 

"Parol  agreements  to  do  something  for  an  indefinite 
period  which  may  be  terminated  within  a  year  are  valid. 

"  To  be  within  the  statute,  it  must  be  such  an  agree- 
ment as  does  not  admit  of  performance,  according  to  its 

24  N.    Y.    Cons.    Laws,    Ch.    41,    §31    (L.    1909,    Ch.    45),    formerly    §21     Personal 
Prop.   Law. 

25  N.    Y.    Cons.   Laws,    Ch.   41,    §  31. 

*•  Blake  v.  Volgt,   134  N.  Y.  69   (1892). 


WRITTEN   AND   ORAL  AUTHORITY   OF   BROKEB.  35 

language  and  intention,  within  a  year  from  the  time  it  is 
made. 

"  The  following  contracts  by  parol  have  been  held 
to  be  enforceable  and  not  within  the  statute  of  frauds: 

' '  To  pay  upon  the  death  of  a  third  person. 

' '  To  pay  upon  the  termination  of  a  suit. 

"  To  pay  on  the  day  of  the  promisor 's  marriage, 
which  was  the  case  in  Skinner. 

' '  To  marry  upon  restoration  to  health. 

"  To  pay  out  of  one's  estate  after  death. 

"  To  pay  during  life  of  promisee.  To  pay  during 
coverture. ' ' 27 

**  Citing  King's  Executors  v.  Hanna.  9  B.  MOD.  369 ;  Sword  v.  Keith,  31  Mich.  247 ; 
McConahey  v.  Griffey,  82  Iowa  564 ;  Hutchinson  v.  Hutchinson,  46  Me.  154 ;  Blanch- 
ard  y.  Weeks,  34  Vt.  589;  Burney  Adr.  v.  Ball,  24  Ga.  505;  Houghton  v.  Houghton. 
14  Ind.  505;  Blake  v.  Votgt,  134  N.  Y.  69;  Bull  y.  McCrea,  8  B.  Mon.  422;  Browne 
on  Frauds  (5th  Ed.),  §§272,  276,  and  cases  cited;  Peter  v.  Compton,  1  Smith  Lead. 
Cas.  143;  Howard's  Adtr.  y.  Burgen,  4  Dana  (Ky.)  137, 


CHAPTER  IV. 
BROKER'S  POWER  TO  SIGN  CONTRACT. 

§  27.    General  Statement. 

The  mere  employment  of  a  broker  as  such  only  au- 
thorizes him  to  act  as  an  intermediary  to  bring  the  par- 
ties together,  and  gives  him  no  authority  to  sign  a  con- 
tract. But  authority  to  sign  a  contract  may  be  given 
him.  (§§  28-41.) 

In  some  jurisdictions  an  agent 's  authority  to  execute 
a  contract  for  the  sale  of  lands  may  be  oral;  while  in 
other  jurisdictions  the  authority  must  be  in  writing. 
(§§31-41.) 

A  subsequent  ratification  is  equally  effectual  as  an 
original  authority.  (§  42.) 

Authority  to  make  a  contract  does  not  include  au- 
thority to  cancel  or  surrender  it.  ( §  45. ) 

§  28.    Broker's  Authority  to  Sign  Contract. 

In  order  to  determine  when  a  real  estate  agent  has 
authority  to  sign  a  contract  and  when  he  has  not  such 
authority,  we  must  necessarily  look  to  the  circumstances 
attending  the  placing  of  the  property  with  him,  unless 
the  authority  is  alleged  to  have  been  given  prior  or  sub- 
sequent to  that  time.  Mere  brokers  or  middlemen,  act- 
ing for  both  parties,  and  whose  duty  is  ordinarily  limited 
to  bringing  together  the  parties  upon  an  agreement,  are 
without  power  to  execute  a  contract  of  sale,  but  an  agent 
authorized  to  sell  real  estate  may  enter  into  a  contract 
within  the  terms  of  his  authority,  which  will  bind  his 

36 


BROKER'S  POWER  TO  SIGN  CONTRACT.  37 

principal,  and  this,  it  has  been  held,  is  of  the  very  es- 
sence of  the  authority  given,  viz.,  an  authority  to  sell.1 
One  who  deals  with  an  agent,  knowing  him  to  be  such,  is 
bound  to  know  the  limitations  placed  upon  his  authority.2 

§  29.    Powers     Conferred    by    Instructions    to     Sell 
Property. 

Ordinarily  when  a  person  places  property  with  a  real 
estate  agent  he  instructs  him  to  "  sell  the  property." 
He  really  means  that  the  agent  is  to  find  a  purchaser.3 
Yet  no  such  fine  distinction  of  words  is  ever  indulged 
in  at  such  times,  and  from  our  own  experience,  we  are 
satisfied  that  any  ordinary  landowner  may,  without  dif- 
ficulty, be  made  to  say  that  he  gave  the  broker  authority 
1 '  to  sell  ' '  the  property.  We  have  found,  however,  that 
juries  will  usually  give  the  same  meaning  to  the  words 
as  the  landowner  did,  and  conclude  that  the  broker  was 
authorized  merely  to  find  a  purchaser.4 

We  could  easily  dismiss  the  subject  by  stating  gen- 
erally that  it  must  resolve  itself  into  a  question  of  in- 
tention, but  a  more  definite  and  satisfactory  answer  may 
naturally  be  expected.  The  situation  is  sometimes  a 
serious  one  for  the  landowner,  since  he  may  at  any  time 
find  a  jury  or  a  court  informing  him  against  his  own  be- 
lief and  intention  that  he  gave  an  agent  authority  to  sign 
a  contract  for  him,  and  it  may  be  equally  embarrassing 
for  the  broker,  since  he  may  sign  a  contract  for  the  owner 
in  good  faith  and  then  be  shocked  into  no  pleasant  mood 
by  a  verdict  that  he  had  no  such  authority.  Such  a  situ- 
ation may  subject  a  responsible  broker  to  considerable 
loss,  as  we  shall  see  later.5 

1  Ilaydock   v.    Stow,   40   N.    Y.    368    (1869).     See  the  more  extended   discussion   and 
citation  of  authorities   in   sections   following. 

2  Commonwealth  Trust  Co.   v.    Young,    122  App.   Div.   502    (N.   Y.    1907)  ;   Dayton   Y. 
Buford.    IS    Minn.    120.    132    (1871);    Kramer    v.    Blair,    88    Va.    462    (1891);    Milne   v. 
Kleb.    44    N.    J.    Eq.    381    (1888). 

*  See  Bacon  v.   Davis,  98  Pac.   Rep.  71    (Cal.    1908).     On  the  words,   "I  will  sell," 
Bee   Bosseau    v.    O'Brien,    4    Biss.    395    (U.    S.    1869). 

*  See  §§  39-41    infra. 

6  §§  38-41,  272-276  infra. 


38  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

§  30.    Powers  Conferred  by  Appointment  as  Agent. 

It  may  be  argued  that  the  agent  has  power  to  sign 
a  contract  because  "  the  appointment  of  an  agent,  in 
general,  carries  with  it  all  powers  necessary,  proper  and 
usual,  to  effectuate  the  purposes  of  the  appointment. ' ' 6 
But  this  must  be  taken  in  connection  with  the  further 
statement  that '  *  the  agent  may  use  the  ordinary  and  ap- 
propriate means  in  execution  of  the  power  given  to  him ; 
and  they  are  deemed  to  be  comprehended  within  the 
authority,  although  not  expressed. ' ' 7  But,  under  the 
prevailing  rule,  a  real  estate  broker  fulfills  his  duty  when 
he  presents  to  the  principal  a  purchaser  ready,  willing 
and  able  to  purchase  on  the  terms  prescribed  by  the  prin- 
cipal,8 or,  under  the  rule  which  prevails  in  some  jurisdic- 
tions, when  he  procures  an  enforceable  contract  of  sale ; 9 
but  under  neither  rule  does  it  follow  impliedly  from  the 
broker's  authority  "to  sell"  that  he  has  power  to  sign 
a  contract  of  sale  for  his  principal  without  special  au- 
thority to  do  so. 

§  31.    Broker's  Power  to  Contract  as  Affected  by  Statu- 
tory Requirements. 

The  Statute  of  Frauds  of  each  state  is  of  importance 
in  determining  whether  the  broker  has  authority  to  sign 
the  contract  of  sale. 

In  those  states  in  which  the  Statute  of  Frauds  re- 
quires the  contract  of  sale  to  be  signed  by  the  vendor  or 
his  duly  authorized  agent,  thereunto  authorized  in  writ- 
ing, or  where  similar  words  are  used,  it  would,  of  course, 
require  written  authority  for  the  broker  to  sign  the  con- 
tract, and  from  the  viewpoint  of  evidence,  the  question 
could  be  determined  by  his  ability  or  inability  to  produce 
written  authorization. 

•Hall    v.    Lauderdale,    46   N.    Y.    70    (1871). 

1 1d. 

8  §§96,    115,    117-119   infra. 

•§§  115,    117-119  infra. 


BROKER'S  POWER  TO  SIGN  CONTRACT  39 

In  those  states  in  which  the  Statute  of  Frauds  re- 
quires the  contract  of  sale  to  be  signed  by  the  vendor  or 
his  duly  authorized  agent,  and  the  provision  that  the 
agent's  authorization  to  sign  must  be  in  writing  is  omit- 
ted, questions  difficult  to  determine  frequently  arise. 

It  is  beyond  the  scope  of  this  work  to  present  the  stat- 
utes of  each  state.  The  statutes  of  several  states  are, 
however,  presented  in  the  following  sections,  while  the 
decisions  in  some  of  the  other  states  are  also  referred  to, 
although  the  statutes  are  not  given. 

The  statutes  requiring  the  agent's  authority  to  ne- 
gotiate a  sale  to  be  in  writing10  must  not  be  confused 
with  the  statutes  requiring  written  authority  in  the 
agent  to  sign  the  contract.  In  the  former  case,  although 
the  agent  has  written  authority  to  sell  as  required  by 
statute,  the  question  nevertheless  arises  whether  this 
written  authority  to  sell  includes  authority  to  sign  the 
contract. 


§  32.    New  York  Rule. 

In  New  York,  while  generally  the  contract  of  sale  must 
be  in  writing,  the  authority  of  an  agent  to  sign  the  con- 
tract for  his  principal  need  not  be  in  writing.  With  re- 
spect to  a  contract,  the  statute11  provides  that  it  must 
be  "subscribed  by  the  grantor  or  by  his  lawfully  au- 
thorized agent,"  while  with  respect  to  a  deed  it  pro- 
vides12 that  it  shall  be  subscribed  by  the  grantor,  "  or 
by  his  lawful  agent,  thereunto  authorized  by  writing." 
In  other  words,  while  as  to  deeds  the  agent's  authority 
to  sign  for  the  principal  must  be  in  writing— i.  e.,  by 
power  of  attorney  or  otherwise— as  to  contracts  for  the 
sale  of  real  property  the  agent  may  be  orally  authorized 


»°  §§  13-22   supra. 

«  N.    Y.    Cons.    Laws,   Ch.    50,    §  259,    formerly   §  224   of   the   Real    Prop.    Law. 

w  N.  Y.  Cons.  Laws,  Ch.  50,  §  242,  formerly  §  207  of  the  Real  Prop.  Law. 


40  POWEKS,   AUTHORITY  AND   BIGHTS   OF   BROKER. 

to  sign  for  the  principal.13  In  an  early  case,14  the  court, 
after  observing  that  the  statute  does  not  require  a  seal 
to  a  contract  for  the  sale  of  real  estate,  says:  "  The  au- 
thority of  the  agent  (to  sign  the  contract)  may  be  con- 
ferred by  parol;  neither  a  written  authority  nor  an  au- 
thority under  seal  is  required." 15 

It  has  been  observed  that  here  exists  a  peculiar  situa- 
tion with  respect  to  a  contract  for  the  sale  of  real  estate. 
The  statute  requires  that  when  a  person  himself  makes 
the  contract  for  the  sale  of  real  estate  it  must  be  in  writ- 
ing, signed  by  him.  When  he  makes  the  contract 
through  an  agent,  the  agent  may  sign,  but  the  agent 's  au- 
thority may  be  given  orally.  What,  therefore,  it  is  said, 
the  person  himself  cannot  do,  except  in  writing,  he  may 
do  orally  through  another.  But  it  seems  that  the  situa- 
tion is  not  very  peculiar  after  all,  for  is  not  the  agent 
acting  for  the  principal?  And  when  the  agent  signs  the 
contract,  is  it  not  the  act  of  the  principal,  performed 
through  his  agent?  This  being  true,  the  peculiarity  of 
the  situation  does  not  deserve  as  much  attention  as  do 
the  dangers,  sometimes  to  the  principal,  sometimes  to 
the  agent,  which  attend  the  situation. 

§  33.    New  Jersey  Rule. 

In  New  Jersey,  the  statute  provides,  "  that  no  action 
shall  be  brought  *  *  *  upon  any  contract  or  sale 
of  lands,  tenements  or  hereditaments,  or  any  interest  in 
or  concerning  them  *  *  *  unless  the  agreement, 
upon  which  such  action  shall  be  brought,  or  some  memo- 
randum or  note  thereof,  shall  be  in  writing,  and  signed 
by  the  party  to  be  charged  therewith,  or  some  other  per- 
son thereunto  by  him  or  her  lawfully  authorized."16 

i*Appelbaum  v.  Galewski,  34  Misc.  281  (N.  Y.  1901);  Worrall  v.  Munn,  5  N.  Y. 
243  (1851). 

"  Worrall    v.    Mnnn,    5    N.    Y.   243    (1851). 

«  See  also  Newton  v,   Bronson,    13  N.   Y.   593    (1856).     See  also  §46  infra. 

"General  Statutes  of  N.   J.    (1709-1895),   Vol.   2,   p.    1603,   §5. 


BECKER'S  POWER  TO  SIGN  CONTRACT.  41 

An  agent  may  be  orally  authorized  to  enter  into  a 
written  contract  for  the  sale  of  land.17  In  New  Jersey, 
therefore,  the  agent's  authority  to  sign  the  contract  need 
not  be  in  writing. 

§  34.    Massachusetts  Rule. 

Nor  does  the  Massachusetts  statute  require  the  agent 's 
authority  to  sign  the  contract  to  be  in  writing.  The  stat- 
ute provides:  "  No  action  shall  be  brought  *  *  * 
upon  a  contract  for  the  sale  of  lands,  tenements  or  here- 
ditaments or  of  any  interest  in  or  concerning  them 
*  unless  the  promise,  contract  or  agreement  upon 
which  such  action  is  brought,  or  some  memorandum  or 
note  thereof,  is  in  writing  and  signed  by  the  party  to  be 
charged  therewith  or  by  some  person  thereunto  by  him 
lawfully  authorized."  18 

§  35.    California  Rule. 

In  California  the  agent's  authority  to  sign  the  con- 
tract must  be  in  writing.  "  The  following  contracts  are 
invalid,  unless  the  same,  or  some  note  or  memorandum 
thereof,  be  in  writing  and  subscribed  by  the  party  to  be 
charged,  or  by  his  agent:  *  *  *  5.  An  agreement 
for  the  leasing  for  a  longer  period  than  one  year,  or  for 
the  sale  of  real  property,  or  for  an  interest  therein,  and 
such  agreement,  if  made  by  an  agent  of  the  party  sought 
to  be  charged,  is  invalid,  unless  the  authority  of  the 
agent  be  in  writing,  subscribed  by  the  party  sought  to 
be  charged."19 

§  36.    Illinois  Rule. 

And  in  Illinois  the  agent's  authority  to  sign  a  con- 
tract must  be  in  writing.  The  statutory  provision  is: 

"Milne  v.  Kleb,  44  N.  3.  Eq.  378  (1888);  Brown  T.  Honlss,  74  N.  J.  L.  605 
(1906). 

"Revised    Laws   of    Mass.     (1902),    Ch.    74,    §  1. 
"  Cal.   Civil   Code,    §  1C24. 


42  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

"  No  action  shall  be  brought  to  charge  any  person  upon 
any  contract  for  the  sale  of  lands,  tenements  or  heredita- 
ments, or  any  interest  in  or  concerning  them,  for  a  longer 
term  than  one  year,  unless  such  contract  or  some  memo- 
randum or  note  thereof  shall  be  in  writing,  and  signed 
by  the  party  to  be  charged  therewith,  or  some  other  per- 
son thereunto  by  him  lawfully  authorized  in  writing, 
signed  by  such  party  *  *  *  . " 20 

§  37.    Rule  in  Other  States. 

Minnesota  requires  written  authority  of  the  agent  to 
sign  contract.21  And  so  does  North  Dakota.22  But,  as 
has  been  said,  the  statute  of  each  state  cannot  be  repro- 
duced here.  It  is  advisable,  therefore,  to  consult  the 
laws  of  the  particular  state  as  occasion  arises. 

§  38.    When  Broker  has  Authority  to  Sign  Contract. 

The  ordinary  authority  of  a  real  estate  broker  de- 
puted to  sell  real  estate  is  simply  to  find  a  purchaser,  and 
he  has  no  power  to  bind  his  principal  by  a  contract  of 
sale,  unless  it  was  intended  to  confer  such  additional  au- 
thority.23 "  Authority  to  make  or  sign  a  written  con- 
tract is  not  conferred,  where  the  thing  to  be  sold  is  land, 
by  giving  an  agent  power,  by  parol,  to  sell. ' ' 24 

§  39.    Mere    Employment   Does   Not    Give   Power   to 
Contract. 

"  The  mere  employment  of  an  ordinary  real  estate 

»  Starr  &  Curtls's  Ann.  111.  Stats.,  Vol.  2  (1896),  p.  1997,  Ch.  59,  §2.  See 
Hughes  v.  Carne,  135  111.  519  (1891). 

a  Revised  Laws   (1905),  §  3488. 

82  Revised    Code,    §  3960. 

28  Bacon  v.  Davis,  98  Pac.  Rep.  71  (Cal.  1908),  (citing  Brandrnp  v.  Britten,  11 
N.  D.  376).  To  the  same  effect  are  Manker  v.  Tough,  98  Pac.  Rep.  792  (Kans.  1908); 
Hardinger  v.  Columbia.  97  £>ac.  Rep.  445  (Wash.  1908)  ;  Dotson  v.  Mllliken,  27  App. 
D.  C.  514.  518  (1906);  Fnrst  v.  Tweed,  93  Iowa  302  (1895);  Ettlnger  v.  Weather- 
head.  29  Ohio  Clr.  Ct.  137  (1906);  Schmidt  v.  Zahrndt.  148  Ind.  447  (1897),  (citing 
Grant  v.  Ede,  85  Cal.  418;  Duffy  v.  Hobson.  40  Cal.  240;  Armstrong  v.  Lowe,  76  Cal. 
616;  Condon  v.  Osgood,  65  N.  W.  1003  (la.);  Jenkins  v.  Locke,  3  App.  D.  C.  485; 
Ballon  v.  Bergvendsen,  9  N.  D.  285  (1900)  ;  Foss  Inv.  Co.  v.  Ater,  95  Pac.  1019  (Wash, 
1908). 

**  Milne  v.  Kleb,  44  N.  J.  Eq.  382  (1888).     See  also  §  33  supra. 


BROKER'S  POWER  TO  SIGN  CONTRACT.  43 

broker  to  effect  a  sale  of  a  parcel  of  land,  even  though  the 
price  and  terms  be  prescribed,  does  not  amount  to  giving 
present  authority  to  such  broker  to  conclude  a  binding 
contract  for  the  same.  Moreover,  such  authority  is  not 
usually  to  be  inferred  from  the  use  by  the  principal  and 
broker  in  that  connection  of  the  terms  *  for  sale  '  or  '  to 
sell  '  and  the  like.  Those  words,  in  that  connection, 
usually  mean  no  more  than  to  negotiate  a  sale  by  finding 
a  purchaser  upon  satisfactory  terms. " 25  In  Kramer  v. 
Blair,  88  Va.  463,  464  (1891),  the  court  refers  to  Grant 
v.  Ede,  85  Cal.  418,  to  show  that  the  words  "  we  will 
sell  "  do  not  mean  that  the  broker  was  authorized  to 
sell,  and  quotes  from  the  California  case:  "  A  general 
authority  to  sell  real  estate  includes  merely  the  power  to 
find  a  purchaser  therefor,  and  the  agent  cannot  conclude 
a  contract  which  will  be  binding  upon  his  principal." 
(See  §§  28-30.) 

§  40.    Extent  of  Authority  Ordinarily  Conferred  by 
Employment. 

"  Ordinarily,  when  property  is  placed  in  the  hands 
of  an  agent  to  sell,  the  authority  conferred  is  only  held 
to  be  the  authority  to  find  a  purchaser  at  a  given  price 
and  submit  the  same  to  the  owner,  and  not  an  authority 
to  sell  and  bind  the  owner."  26  "A  real  estate  broker  or 
agent  is  one  who  negotiates  the  sale  of  real  property. 
His  business,  generally  speaking,  is  only  to  find  a  pur- 
chaser who  is  willing  to  buy  the  land  upon  the  terms 
fixed  by  the  owner.  He  has  no  authority  to  bind  the 
principal  by  signing  a  contract  of  sale."27  "The  busi- 
ness of  agents  for  the  purchase  or  sale  of  real  estate  is 
simply  to  bring  the  parties  together.  What  is  done  by 

*  Keltn  T.  Llndley,  30  Atl.  Rep.  (N.  J.  Ch.  1895)  1063,  at  1073.  See  also 
§§  29,  30  supra. 

26  Gault   Lumber  Co.    v.    Pyles,   92   Pac.    Rep.    175    (Okl.    1907). 

27  McCullough    v.    Hitchcock,    71    Conn.    404    (1899). 


44  POWEKS,    AUTHORITY   AND   RIGHTS   OF   BROKER. 

them  beyond  this  must  be  specifically  authorized  or  rati- 
fied by  their  principals  to  make  them  responsible.  They 
have  no  implied  authority  from  the  nature  of  their  busi- 
ness. They  cannot  bind  their  principals  as  to  the  terms 
of  sale,  or  the  damages  which  may  arise  from  the  breach 
of  any  contract  for  the  purchase  or  sale  of  real  estate. ' ' 28 
"  Undoubtedly  a  broker  may  be  given  authority  to  con- 
tract,  but  the  mere  employment  of  a  broker  as  such  only 
authorizes  him  to  act  as  an  intermediary  to  bring  the 
parties  together. ' ' 29 


§  41.    Dissenting  Opinions  as  to  Incidental  Power  to 
Contract. 

In  the  dissenting  opinion  in  Beattie  v.  Burt,  122  App. 
Div.  473  (N.  Y.  1907),  it  was  said,  though  that  was  not 
the  real  point  decided,  that  where  a  person  has  authority 
to  sell  land,  as  such  he  possesses  authority  to  sign  a  con- 
tract. It  was  also  said  by  the  New  York  Court  of  Ap- 
peals in  Schultz  v.  Griffin,  121  N.  Y.  294,  299  (1890), 
though  not  in  a  dissenting  opinion:  "  There  seems  to  be 
no  well-founded  distinction  between  real  and  personal 
property,  requiring  a  different  construction  of  an  agency 
for  sale  in  the  two  cases.  The  great  preponderance  of 
authority  now  is  that  a  power  without  restriction  to  sell 
and  convey  real  estate  gives  authority  to  the  agent  to 
deliver  deeds  with  general  warranty  binding  on  the  prin- 
cipal, where,  under  the  circumstances,  this  is  the  com- 
mon and  usual  mode  of  assurance. ' ' 30 

In  this  case  the  agent  was  authorized  to  sell,  in  writ- 
ing, but  the  writing  does  not  appear  to  have  contained 
any  express  authority  to  sign  contract  or  deed.  In  the 

28  Re    Falrmount    Cab    Co.,    9    Pa.    Co.    Ct.    202    (1890). 

20  Rowland    v.    Hall,    121    App.    Div.    461    (N.    Y.    1907). 

80  Citing  Le  Roy  v.  Beard,  8  How.  (D.  S.)  451;  Peters  v.  Farnsworth,  15  Vt. 
155 ;  Vanade  v.  Hopkins,  1  J.  J.  March,  293 ;  Taggart  v.  Stanbery,  2  McLean  543 ; 
Rawle  on  Cov.,  §  20,  note. 


BROKER'S  POWER  TO  SIGN  CONTRACT.  45 

report  of  this  case,  the  syllabus  interprets  the  quotation 
given  to  mean  that  a  power,  without  restriction,  to  sell 
and  convey  real  estate  "  gives  authority  to  the  agent  to 
contract  to  sell  and  convey  by  deed  with  general  war- 
ranty where  under  the  circumstances  this  is  the  common 
and  usual  mode  of  assurance."  This  was  undoubtedly 
the  intent  of  the  quotation.  In  any  event,  as  the  case 
was  decided  on  another  point,  the  statement  quoted  may 
be  regarded  as  merely  a  dictum. 


§  42.    Ratification  of  Contract  Signed  by  Agent. 

1 '  It  is  well  settled  that  parol  authority  to  the  agent 
is  sufficient  to  satisfy  the  requirements  of  the  statute  of 
frauds,31  and  that  such  authority  may  be  inferred  and 
deduced  from  circumstances  and  a  course  of  dealing ;  and 
that  a  contract  made  by  an  agent  without  authority  may 
be  ratified  and  adopted  by  subsequent  conduct,  and  even 
by  mere  silence.  Fry,  Spec.  Perf.  (3rd  Am.  Ed.),  §  509; 
Pom.  Cont.,  §§  77,  78;  Wat.  Spec.  Perf.,  §  243;  What. 
Ag.,  §§  85-89.  "32 

In  Rowan  v.  Hyatt,  45  N.  Y.  138  (1871),  the  agent  was 
authorized  to  receive  proposals  for  the  sale  of  property, 
and  contracted  in  the  owner's  name  to  sell  the  property, 
and  wrote  the  owner  so,  but  the  latter  never  received  the 
letter,  and  later  the  owner  was  told  of  the  sale  but  not 
of  the  signing  of  the  contract.  The  owner  subsequently 
wrote  indicating  that  he  was  satisfied  with  the  price,  but 
when  he  learned  that  the  broker  had  assumed  to  sign  a 
contract  for  him  he  at  once  repudiated  the  transaction. 
Held,  no  ratification  of  the  contract. 

M  In  considering  this  quotation  (from  a  New  Jersey  case)  it  should  be  borne  In 
mind  that  in  that  state,  as  well  as  In  some  others,  the  Statute  of  Frauds  does  not 
require  the  authority  of  an  agent  to  sign  a  contract  to  be  In  writing.  See  §§  29-35 
supra. 

82  Keim  v.  Lindley,  30  Atl.  Rep.  (N.  J.  Ch.  1895)  1063,  1064.  See  also  Ettinger 
v.  Weatherhead,  29  Ohio  Cir.  Ct.  137  (1906) ;  Newton  v.  Bronson,  13  N.  Y.  594 
(1856). 


46  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

§  43.    Liability   of   Agent   for   Signing   Unauthorized 
Contract. 

The  liability  of  an  agent  for  signing  a  contract  which 
he  had  no  authority  to  sign  is  considered  in  detail  in  a 
later  chapter.33 

§  44.    Formalities  where  Agent  has  Authority  to  Sign 
Contract. 

Where  there  is  no  question  about  the  authority  of  a 
broker  to  enter  into  a  formal  contract  for  his  principal, 
as  where  the  broker  has  a  power  of  attorney,  and  is  there- 
fore the  attorney  in  fact  of  the  principal  as  well  as  the 
broker  in  the  transaction,  or  where  he  has  other  written 
authority  to  sign  the  contract,  or  where  his  authority  to 
sign  a  contract,  though  oral,  is  not  disputed,  certain  for- 
malities should  be  observed.  The  contract  should  be 
made  in  the  name  of  the  principal,  so  that  there  can  be 
no  question  that  it  is  the  principal  who  contracts,  and 
not  the  agent.  As  to  signature,  "It  is  immaterial 
whether  the  agent  signs  his  name  to  the  instrument  be- 
fore or  after  the  name  of  the  principal.  It  is  sufficient 
if  the  agent  executes  the  paper  in  the  name  of  the  prin- 
cipal and  not  in  his  own  name. ' ' 34  The  agent  may  there- 
fore sign  "John  Smith,  as  Agent  for  William  Brown,"  or 
' '  William  Brown,  by  John  Smith,  Agent, ' '  and  the  effect 
is  the  same  in  either  case. 

§  45.    Authority  to  Cancel  or  Surrender  Contract. 

An  authority  to  make  a  contract  for  another  is  not 
sufficient  to  authorize  its  cancellation  or  surrender.35 

§  46.    Enforcing  Contract  Made  by  Agent. 

Where  a  contract  is  signed  by  agents  only  in  their 

»  See  §§  272-276  infra. 

»*  Worrall    v.    Munn,    5    N.    Y.    244    (1851). 

*Stllwell  v.  Mutual  Life  Co.,  72  N.  Y.  391,  392   (1878). 


BROKER'S  POWER  TO  SIGN  CONTRACT.  47 

own  names  and  there  is  no  seal,  an  action  can  be  main- 
tained by  and  against  the  principals  for  whom  these 
agents  signed.36  But  if  the  contract  is  under  seal,  and 
the  name  of  the  principal  is  not  disclosed,  it  can  be  en- 
forced only  against  the  parties  to  the  instrument.37  As 
has  been  said  before,  a  contract  for  the  sale  of  real  estate 
in  some  jurisdictions  need  not  be  under  seal.38 

Where  an  agent  is  appointed  orally  and,  without  dis- 
closing his  agency,  makes  a  contract  under  seal  in  his 
own  name  for  the  purchase  of  real  estate,  the  contract 
cannot  be  enforced  against  the  principal  afterward  dis- 
covered.39 On  the  other  hand,  the  principal  cannot  sue 
on  a  sealed  instrument  made  by  an  agent  in  his  own 
name,  even  though  the  latter  adds  the  word  "  agent  " 
after  his  name,  if  he  does  not  disclose  for  whom  he  is 
agent.40  And  the  same  rule  applies  where  the  contract 
was  made  by  an  officer  of  a  corporation,  as  purchaser, 
and  he  designates  himself  as  "  president  "  and  signs  his 
name  and  adds  thereto,  * '  President  of  Buffalo  Catholic 
Institute. " 41  In  this  case  it  was  held  that  such  addi- 
tions are  merely  descriptio  persona  and  do  not  make  the 
contract  the  contract  of  the  corporation. 

*«  Pelletreau   v.    Brennan,    113   App.    Dir.    806    (N.    Y.    1906). 

«  Van  Allen  v.  Peabody,  112  App.  Dlv.  57  (N.  Y.  1906).  See  also  Henricos  v. 
Englert,  137  N.  Y.  488  (1893);  Loeb  v.  Barrls,  50  N.  J.  L.  384  (1888);  Haley  v. 
Boston  Belting  Co..  140  Mass.  74  (1885). 

«  See   §  32   supra,   also   §  354   infra. 

» Brlggs   v.    Partridge,    64    N.    Y.    357    (1876). 

"Schaefer   v.    Henkel,    75    N.    Y.    378    (1878). 

"Buffalo    Catholic    Institute    v.    Bitter,    87    N.    Y.    250    (1882). 


CHAPTER  V. 
BROKER  ACTING  FOR  BOTH  PARTIES. 

§  47.    General  Statement. 

A  broker  cannot,  at  the  same  time  and  in  the  same 
transaction,  be  acting  for  both  parties  (§§  48-50),  except: 

(1)  Where  both  parties  know  that  the  broker 
is  so  acting.     (§  52.)     Or 

(2)  Where  the  broker  is  vested  with  no  discre- 
tion.    (§§  53-57.) 

The  rule  applies  to  an  exchange  as  well  as  to  a  sale  of 
property.  (§  51.) 

Where  the  principal  desires  to  avail  himself  of  the 
fact  that  the  broker  accepted  or  agreed  to  accept  com- 
missions from  both  sides,  he  should  plead  it  as  a  defense. 
(§  58.) 

§  48.    Broker  Not  to  Act  for  Both  Sides. 

It  is  the  broker's  duty  to  act  solely  for  and  in  the 
interest  of  his  employer.  This  is  implied  in  the  contract. 
The  employer  is  entitled  to  the  disinterested  efforts  and 
judgment  of  the  broker,  and  if  the  broker  procures  a  pur- 
chaser for  whom  he  is  also  acting  as  agent,  without  dis- 
closing the  fact  to  his  employer,  he  is  precluded  from  re- 
covering any  compensation.1 

The  principal  is  entitled  to  the  exercise  in  his  behalf 

iHarten  v.  Loffler,  31  App.  D.  C.  368,  369  (1908),  (citing  Raisin  v.  Clark,  41 
Md.  158,  161  ;  20  Am.  Rep.  66 ;  Farnsworth  v.  Hemmer.  1  Allen  494.  495 ;  79  Am. 
Dec.  756;  Rice  v.  Wood,  113  Mass.  133,  135;  18  Am.  Rep.  459;  Marsh  v.  Buchan, 
46  N.  J.  Eq.  595,  597;  22  Atl.  128;  Bell  v.  McDonnell.  37  Ohio  St.  396.  399;  41 
Am.  Rep.  528  ;  Carpenter  v.  Hogan,  40  Ohio  St.  203  ;  Bollman  v.  Loomis,  41  Conn.  581  ; 
Murray  v.  Beard,  102  N.  Y.  505,  508;  7  N.  E.  553;  Wilkinson  v.  McCullough.  196  I'a. 
205.  208;  79  Am.  St.  Rep.  702;  46  Atl.  357;  Warrick  v.  Smith,  137  111.  504;  27  N. 
E.  709;  Hafner  v.  Herron,  165  111.  242,  247;  46  N.  E.  211). 

48 


BROKER    ACTING   FOR   BOTH    PARTIES.  49 

of  all  the  skill,  industry  and  ability  and  the  intensest 
fidelity  of  his  agent.  The  agent  is  under  the  implied  ob- 
ligation of  using  the  utmost  good  faith,  candor  and  zeal 
in  obtaining  for  his  employer  the  best  price  for  his  prop- 
erty.2 

A  unique  opinion  is  the  one  of  Powell,  J.  in  Gann  v. 
Zettler,  60  S.  E.  283  (Ga.  1908),  where  he  writes:  "  It 
is  recorded  of  Him  *  who  spake  as  never  man  spoke  ' 
that,  '  seeing  the  multitudes,  he  went  up  into  a  moun- 
tain, and  when  he  was  set  his  disciples  came  unto  him; 
and  he  opened  his  mouth  and  taught  them,  saying: 
*  *  *  "No  man  can  serve  two  masters;  for  either  he 
will  hate  the  one  and  love  the  other,  or  else  he  will  hold  to 
the  one  and  despise  the  other."  So,  also,  is  our  law. 

Civ.  Code,  1895,  §§  3010,  3011,  3014,  3018.  Whoso,  hav- 
ing undertaken  the  service  of  his  master,  counsels  with 
another  and  agrees  also  to  serve  him  in  those  same 
things  wherewith  he  has  been  trusted,  cannot  claim  the 
reward  promised  by  his  master  unless  he  makes  it  plain 
that  he  has  not  acted  privily,  but  that  his  master  was 
consenting  thereto." 

§  49.  Acting  for  Both  Parties  a  Breach  of  Contract. 

11  It  is  implied  in  every  contract  of  agency  that  the 
agent  shall  use  his  best  efforts  to  promote  the  interests 
of  his  principal,  and  it  is  ordinarily  inconsistent  with 
the  proper  discharge  by  a  broker  of  his  duty  to  one  em- 
ployer that  he  shall  at  the  same  time  and  in  the  same 
matter  be  acting  for  another.  The  interests  of  the  seller 
and  purchaser  of  property  in  the  negotiation  for  its  sale 
are  adverse.  It  is  the  interest  of  the  seller  to  get  the 
highest  price  and  of  the  purchaser  to  buy  at  the  lowest. 
So  when  a  broker  to  sell  is  at  the  same  time  the  broker  to 
buy,  the  fact  of  the  double  agency,  if  unknown  to  the 

"Roome   v.    Robinson,    99   App.    DIv.    143    (N.    Y.    1904). 


50  POWERS,    AUTHORITY    AND   RIGHTS   OF    BROKER. 

principals,  is  a  breach  of  his  implied  contract  with  each, 
and  operates,  or  is  likely  to  operate,  as  a  fraud  upon 
both.3  The  law,  therefore,  to  prevent  fraud,  and  upon 
the  most  obvious  reasons  of  justice  and  policy,  will  not 
in  such  a  case  enforce  the  contract  for  compensation, 
and  this,  irrespective  of  the  consideration  whether  the 
sale  made  was  or  was  not  advantageous  to  the  party  from 
whom  the  compensation  is  claimed. ' ' 4 

§  50.    Acting  for  Both  Parties  Constitutes  a  Fraud. 

Where  a  broker,  ascertaining  that  a  person  desires  to 
sell  or  exchange  his  property,  calls  upon  him  and  is  di- 
rected to  see  what  he  can  do,  and  thereupon  finds  a  pur- 
chaser or  a  party  having  property  to  exchange,  and  the 
fact  is  that  he  is  also  the  agent  of  such  other  party,  the 
broker  can  recover  no  commission  from  the  owner,  for 
if  he  acts  under  such  employment  it  is  his  duty  to  act 
solely  for  and  in  the  owner's  interest. 

This,  although  not  expressed,  is  implied  in  the  agree- 
ment. The  owner  is  entitled  to  the  disinterested  efforts 
and  judgment  of  his  broker  in  the  matter  of  the  agency, 
and  if  the  broker  has  procured  a  purchaser  for  whom  he 
is  also  acting  as  agent  without  disclosing  the  fact  to  the 
owner,  it  constitutes  such  fraud  as  would  preclude  him 
from  recovering  any  compensation.5 

§  51.  The  Rule  Applies  to  Exchange  of  Property. 

Even  though  the  transaction  is  an  exchange,  the 
broker  cannot  recover  commissions  if  he  is  intrusted 

•  See  Plotner  v.  Chillson.  95  Pac.  777  (Okl.  1908).  referring  to  and  quoting 
from  Campbell  v.  Baxter,  41  Neb.  735;  60  N.  W.  91,  (citing  Rice  v.  Wood.  113  Mass. 
133;  18  Am.  Rep.  459;  Walker  v.  Osgood.  98  Mass.  348;  93  Am.  Dec.  108;  Bollman 
v.  Loomis,  41  Conn.  581;  Meyer  v.  Hanchett,  43  Wise.  240;  Holcomb  v.  Weaver.  130 
Mass.  265;  Byrd  v.  Hughes.  84  111.  174;  25  Am.  Rep.  442;  Atlee  v.  Fink.  75  Mo.  100; 
43  Am.  Rep.  385;  Scribner  v.  Collar.  40  Mich,  375;  29  Am.  Rep.  541). 

«Duryee  v.  Lester,  73  N.  Y.  442  (1878).  (citing  Everhart  v.  Searle,  71  Penn. 
St.  259;  Farasworth  v.  Hemmer,  1  Allen  494;  79  Am.  Dec.  756). 

» Carman   v.    Beach,    63   N.   Y.   97    (1875). 


BEOKER   ACTING  FOR   BOTH   PARTIES.  51 

with  any  discretion,  and  has  an  agreement  to  receive 
part  of  the  commission  from  the  other  side,  without  the 
knowledge  of  both  parties.6  But  the  rule  does  not  apply 
to  an  exchange  of.  property  where  the  broker  has  no  dis- 
cretion but  is  simply  to  bring  the  parties  together.  In 
such  case  the  broker  is  a  mere  middleman.7  Where  the 
broker  is  a  middleman  in  the  transaction,  he  is  not  bound 
to  inform  his  principal  of  his  employment  by  the  other 
side.  In  fact,  in  one  case 8  it  was  said :  * '  Indeed,  it  may 
be  said  that  defendant  might  reasonably  assume  that,  in 
an  exchange  of  property,  a  broker  receives  commissions 
from  both  sides."9  Where  the  contract  provides  that 
each  of  the  parties  is  to  pay  the  broker  a  commission,  it 
would  appear  from  the  contract  that  they  knew  he  was 
acting  for  both  sides,  and  therefore,  as  stated  in  the  fol- 
lowing section,  they  cannot  refuse  his  compensation.10 

§  52.    Acting  for  Both  Parties  with  Their  Knowledge. 

1  i  When  a  broker  is  employed  by  both  the  vendor  and 
the  purchaser,  neither  can  refuse  compensation  if  he  had 
knowledge  that  the  broker  held  the  same  relation  to  the 
other  party."  n  The  burden  of  proof  is,  however,  on  the 
broker  to  show  that  the  employer  knew  of  the  double 
employment.12 

Where,  after  knowledge  of  the  broker's  receipt  of  pay 
from  the  other  party,  the  principal  still  promises  to  pay 
the  broker  his  commission,  and  especially  where  the  prin- 

«  Norman  v.  Reuther,  25  Misc.  161  (N.  Y.  1898)  ;  Hannan  v.  Prentls,  124  Mich. 
417  (1900). 

»  Clark    v.    Allen,    125   Cal.    278    (1899). 

8  Marks   v.    O'Donnell,    66   Misc.    147    (N.    Y.    1910). 

•See   also   Alvord   v.    Cook,    174    Mass.    120    (1899). 

10  Wlllner   v.    Seale,    127   App.    Dlv.    180    (N.    Y.    1908). 

"  Jarvls  v.  Schaefer,  105  N.  Y.  289  (1887);  Tleck  v.  McKenna,  115  App.  DtT. 
701  (N.  Y.  1906)  ;  Lamb  v.  Baxter.  130  N.  C.  67  (1902)  ;  Denntson  v.  Gault,  132  Mo. 
App.  301  (1908)  ;  Evans  v.  Rockett.  32  Pa.  Super.  Ct.  365  (1907)  ;  Welnhonse  Y. 
Cronln,  68  Conn.  254  (1896)  ;  M'Lure  v.  Luke,  154  Fed.  Rep.  650  (1907),  (citing 
Meyer  v.  Hanchett,  43  Wise.  246;  Scrlbner  v.  Collar.  40  Mich.  375;  Leathers  y. 
Canfleld,  45  L.  R.  A.  33;  117  Mich.  277:  Hobart  v.  Sherburne,  66  Minn.  171;  Young 
v.  Tralnor,  42  N.  E.  139;  158  111.  428;  Hannan  v.  Prentls,  124  Mich.  417;  83  N.  W. 
102). 

12  Hannan  v.   Prentls,    124   Mich.   417    (1900). 


52  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

cipal  actually  pays  something  on  account,  he  ratifies  the 
broker's  act.13 

Where  the  buyer,  who  promised  to  pay  the  broker  a 
commission,  was  told  by  the  broker  that  the  owner  had 
placed  the  property  with  him  and  then  attempts  to  es- 
cape payment  of  the  promised  commission,  the  jury  may 
find  that  knowledge  of  the  double  employment  existed.14 
But  in  a  Pennsylvania  case  it  was  held  that  an  agree- 
ment to  waive  the  rule  of  law  that  commissions  cannot 
be  recovered  from  both  sides  cannot  be  inferred  from 
knowledge  of  the  fact  that  such  rule  has  been  violated, 
or  from  silence,  or  failure  to  dissent  at  the  time,  or  from 
all  these  combined.15 

§  53.    Acting  for  Both  Parties  Not  Unlawful  in  Itself. 

"It  is  not  per  se  unlawful  for  one  to  act  as  the  broker 
for  the  buyer  and  seller  without  disclosing  the  fact. 
The  broker  may  be  a  mere  middleman.  It  is  only  when 
his  employment  is  that  of  an  agent  with  discretionary 
authority  from  his  principal  in  the  matter  of  such  em- 
ployment that  he  cannot  accept  payment  from  another 
whose  interests  conflict  with  those  of  the  first  princi- 
pal."16 

§  54.    Broker  Vested  with  No  Discretion  May  Act  for 
Both  Parties. 

As  stated,  a  broker  employed  to  buy  or  sell,  who  is 
vested  with  any  discretion,  or  upon  whom  his  employer 
has  a  right  to  rely  for  the  benefit  of  his  skill  or  judg- 
ment, loses  his  right  to  compensation  if  he  agrees  to  act 

»  Bonwell   v.    Auld,   9   Misc.    65    (N.   Y.    1894).      See  §§67,    109-112   infra. 

"  Geery    v.    Pollock,    16   App.    Dlv.    321    (N.    Y.    1897).      See  also   §51    »\ipra. 

u  Evans   v.    Rockett,    32   Pa.    Super.   Ct.    365    (1907). 

18  Pollatschek  v.  Goodwin.  17  Misc.  591  (N.  Y.  1896)  ;  M'Lure  v.  Luke,  154  Fed. 
Rep.  C50  (1907),  (citing  Farnsworth  v.  Hemmer,  1  Allen  (Mass.)  494;  79  Am.  Dec. 
756;  Rupp  v.  Sampson,  16  Gray  (Mass.)  401;  Knauss  v.  Knieger  Brewg.  Co.,  142  N. 
Y.  75 ;  Empire  St.  Ins.  Co.  v.  American  Central  Ins.  Co.,  138  N.  Y.  449)  ;  Clark  v. 
Allen,  125  Cal.  278  (1899),  (citing  Slanders  v.  Craft,  3  Colo.  App.  239). 


BROKER   ACTING   FOR   BOTH   PARTIES.  53 

in  a  similar  capacity  for  the  other  party,  but  this  does 
not  apply  to  one  simply  employed  to  bring  the  parties 
together.17 

"  A  broker  who  is  employed  to  sell  property,  and 
whose  duty  it  is  not  only  to  find  a  purchaser  but  to  ne- 
gotiate the  sale,  cannot  accept  any  compensation  from 
any  other  person  than  his  employer ;  and  if  he  does  make 
an  agreement  to  be  paid  by  the  purchaser,  or  if  he  as- 
sume a  position  with  reference  to  the  transaction  where 
his  duty  and  interest  might  clash,  he  loses  all  right  to 
his  commissions  from  his  employer.  But  that  rule  ap- 
plies only  to  a  case  where  the  duty  of  the  broker  to  his 
employer  calls  for  the  exercise  of  his  judgment  or  dis- 
cretion, when  he  must  confine  himself  to  acting  for  the 
person  who  employed  him,  and  look  solely  to  him  for  his 
reward.  But  when  he  is  employed  simply  to  find  a  pur- 
chaser upon  terms  fixed  by  his  employer,  his  duty  is  per- 
formed by  bringing  to  the  seller  one  who  is  willing  to 
purchase  upon  such  terms.  He  has  no  discretion  to  ex- 
ercise, and  there  is  no  reason  why  he  should  not  be  per- 
mitted to  take  from  the  purchaser  such  compensation  as 
he  may  see  fit  to  give  for  the  benefit  he  has  received  by 
being  informed  of  the  fact  that  he  would  be  able  to  make 
such  a  purchase." 18 

§  55.    Compensation  of  Broker  Without  Discretion. 

"Where  one  acts  as  a  middleman,  merely  bringing  ven- 
dor and  vendee  together  to  make  their  own  contract 
without  aid,  advice  or  interference  to  or  on  behalf  of 
either,  he  may  obtain  compensation  from  both,  even 
without  knowledge  of  one  of  such  arrangement  with  the 
other.19  The  court  in  Harten  v.  Loffler,  31  App.  D.  C. 

"  Knauss  v.  Krueger  Brewing  Co.,  142  N.  Y.  70  (1894);  Lamb  v.  Baxter,  130 
N.  C.  67  (1902). 

"  Grncie  v.  Stevens.  5C  App.  Div.  203  (N.  Y.  1900).  As  to  when  broker's  duty 
is  performed,  see  §§  117-119  infra. 

19  Harten  v.  Loffler,  31  App.  D.  C.  370  (1908),  (citing  Ranney  v.  Donovan,  78 
Mich.  318,  329;  44  N.  W.  276;  M'Lure  v.  Luke,  154  Fed.  647;  Manders  v.  Craft,  3 


54  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

370  (1908)  stated  that  whether  this  doctrine  be  sound  to 
the  full  extent  of  want  of  knowledge  by  the  respective 
parties  it  was  unnecessary  to  inquire,  as  there  was  noth- 
ing in  the  facts  of  that  case  to  which  it  could  be  applied. 

Where  the  broker  represents  the  purchaser  and  is  to 
be  paid  by  him,  and  he  asks  no  commission  from  the 
vendor  until  after  the  vendor  has  accepted  the  offer 
submitted  by  the  vendee,  but  the  vendor  then  promises 
to  pay  a  commission,  the  interests  of  the  vendee  are  not 
affected  by  the  commission  from  the  vendor,  and  the 
broker  may  recover  accordingly.20 

In  Davis  v.  Weber,  46  Misc.  590  (N.Y.1905),  the  owner 
paid  the  broker  a  commission  for  obtaining  her  tenant, 
and  then,  giving  the  tenant  an  option  to  purchase  the 
property  at  a  fixed  price  within  a  certain  time,  it  was 
agreed  that  if  the  tenant  exercised  the  option  and  bought, 
the  owner  was  to  pay  the  broker  a  commission  on  the  sale. 
The  tenant  was  later  offered  a  price  in  excess  of  his  op- 
tion, and  through  the  efforts  of  .the  broker  obtained  a 
purchaser  at  still  higher  figures  and  paid  the  broker  a 
commission  therefor.  The  tenant  having  exercised  his 
option,  it  was  held  that  the  broker  was  entitled  to  re- 
cover his  commission  from  the  owner,  although  he  also 
received  a  commission  from  the  tenant,  since  the  owner, 
by  the  execution  of  the  lease  and  option,  had  debarred 
herself  from  selling  to  any  one  but  the  tenant,  and 
thereby  terminated  any  fiduciary  relations  between  her- 
self and  the  broker. 

§  56.    General  Rule  as  to  Discretion. 

"It  is  undeniable  that  where  the  broker  or  agent  is 
invested  with  the  least  discretion,  or  where  the  party  has 
the  right  to  rely  on  the  broker  for  the  benefit  of  his  skill 

Colo.  App.  236,  238;  32  Pac.  836;  Orton  v.  Seofleld,  61  Wise.  382,  384;  21  N.  W. 
262 ;  Rupp  v.  Sampson,  16  Gray  398,  401 ;  77  Am.  Dec.  416 ;  Knauss  v.  Gottfried 
Krueger  Brewg.  Co.,  142  N.  Y.  70,  75;  36  N.  E.  867). 

»  Jones  v.  Henry,  15  Misc.   153   (N.  Y.  1895).     And  see  §  121  infra. 


BROKER   ACTING   FOR   BOTH    PARTIES.  55 

or  judgment,  in  any  such  case  an  employment  of  the 
broker  by  the  other  side  in  a  similar  capacity,  or  in  one 
where  by  possibility  his  duty  and  his  interest  might 
clash,  would  avoid  all  his  right  to  compensation.  The 
whole  matter  depends  upon  the  character  of  his  employ- 
ment. If  A  is  employed  by  B  to  find  him  a  purchaser 
for  his  house  upon  terms  and  conditions  to  be  determined 
by  B  when  he  meets  the  purchaser,  I  can  see  nothing 
improper  or  inconsistent  with  any  duty  he  owes  B  for 
A  to  accept  an  employment  from  C  to  find  one  who  will 
sell  his  house  to  C  upon  terms  which  they  may  agree 
upon  when  they  meet.  And  there  is  no  violation  of  duty 
in  such  case  in  agreeing  for  commissions  from  each  party 
upon  a  bargain  being  struck,  or  in  failing  to  notify  each 
party  of  his  employment  by  the  other. ' ' 21 

§  57.    Reason  for  the  Rule. 

In  Empire  State  Ins.  Co.  v.  American  Central  Ins. 
Co.,  138  N.  Y.  446,  449,  450  (1893),  the  court  said:  "  It 
is  not  doubted  that  the  same  person  may  sometimes  act 
as  agent  for  the  two  parties  in  the  same  transaction. 
But  he  can  do  so  only  in  case  he  has  no  discretion 
to  exercise  for  either  party.  An  agent  to  sell  for  one 
party  may  also  act  as  agent  for  the  buyer,  but  only  in 
case  the  price  and  terms  of  sale  have  been  fixed  by  each 
party,  so  that  nothing  is  left  to  his  discretion.  But  an 
agent  to  sell,  intrusted  with  a  discretion,  and  thus  bound 
to  obtain  the  best  price  he  can,  cannot  buy  for  himself  or 
as  agent  for  another.  In  such  a  case  he  would  occupy 
antagonistic  positions  and  there  would  be  a  conflict  of 
interests.  He  could  not  faithfully  serve  the  one  party 
without  betraying  the  interests  of  the  other.  He  would 
at  least  be  under  great  temptation  to  betray  the  interest 
of  one  of  the  parties.  So  a  person  may  sometimes  act 

«  Knauss   v.    Krueger  Brewg.    Co.,    142   N.    T.    75    (1894). 


56  POWERS,   AUTHORITY   AND   BIGHTS   OF   BROKER. 

as  agent  of  both  parties  in  the  making  of  any  contract. 
But  he  cannot  do  so  when  he  is  invested  with  a  discretion 
by  each  party,  and  when  each  is  entitled  to  the  benefit  of 
his  skill  and  judgment.  The  rules  of  law  upon  this  sub- 
ject have  been  laid  down  and  illustrated  in  many  cases, 
of  which  it  is  sufficient  for  the  present  purpose  to  cite 
the  following:  Utica  Ins.  Co.  v.  Toledo  Ins.  Co.,  17 
Barb.  132;  Kett  v.  Washington  Marine  and  Fire  Ins.  Co., 
41  Barb.  353;  N.  Y.  Central  Ins.  Co.  v.  National  Fire  Ins. 
Co.,  14  N.  Y.  85;  Claflin  v.  Farmers'  &  Citizens '  Bank,  25 
N.  Y.  293;  Murray  v.  Beard,  102  N.  Y.  505,  509;  Porter  v. 
Woodruff,  36  N.  J.  Eq.  174;  Michoud  v.  Girod,  4  How. 
(U.  S.)  503. 

1 '  Contracts  thus  negotiated  are  void  at  the  option  of 
any  non-assenting  party  thereto.  The  policy  of  the  law 
condemns  them.  It  matters  not  that  the  agent  has  acted 
fairly  and  honestly,  and  even  that  neither  party  to  the 
contract  has  suffered  injury.  It  is  enough  to  condemn 
the  contract  that  the  common  agent  in  fact  had  any,  even 
the  least,  discretion  to  exercise  for  the  parties.  As  said 
by  the  Chancellor  in  Porter  v.  Woodruff,  '  So  jealous  is 
the  law  upon  this  point  that  it  will  not  even  allow  the 
agent  or  trustee  to  put  himself  in  a  position  in  which  to 
be  honest  must  be  a  strain  upon  him.7  "  22 

§  58.    How  Question  of  Double  Employment  Is  Raised. 

Where  the  principal  desires  to  avail  himself  of  the 
fact  that  the  broker  accepted  or  agreed  to  accept  commis- 
sions from  both  sides,  he  must  plead  it  as  a  defense.23 
In  Norman  v.  Reuther,  25  Misc.  161  (N.  Y.  1898),  (citing 
Chatfield  v.  Simonson,  92  N.  Y.  209),  it  was  said  that 
while  the  owner  did  not  plead  affirmatively  that  the 
broker  was  acting  for  both  sides,  without  the  knowledge 

"This  case  cited  in   Hartford  Fire  Ins.   Co.  T.   McKenxie,   70  III.  App.   624. 
»Bonwell  T.  Anld,   9  Misc.   65    (N.   Y.   1894). 


BROKER   ACTING   FOR   BOTH    PARTIES.  57 

of  both,  proof  of  it  may  be  made  where  the  answer  denies 
the  performance  of  the  services.24  But  in  Duryee  v. 
Lester,  75  N.  Y.  442  (1878),  the  Court  of  Appeals  re- 
marked that  if  one  of  the  parties  to  a  deal  desires  to 
avoid  liability  on  the  ground  that  the  agent  has  agreed 
for  commissions  from  both  sides,  it  seems  the  better 
practice  is  to  plead  it  and  not  to  rely  on  a  mere  general 
denial.25 


"  S#*  also  Briefly  v.  Connelly,  31  Misc.  (N.  T.)  268,  to  same  effect,  and  Wolff  v. 
Denbosky,  36  Misc.  (N.  Y.)  643,  where  a  general  denial  was  held  sufficient  to  raise 
the  question. 

=*  See  1  Chltty  on  PL,  501. 


CHAPTER   VI. 
BROKER'S    RIGHT    TO    INTEREST   IN   PROFITS. 

§  59.    General  Statement. 

Neither  an  agent,  nor  those  in  his  employ,  may  be 
interested  in  the  profit  of  a  sale  to  or  purchase  from  his 
principal  without  the  clear  assent  of  the  principal. 
(§§  60-64.)  That  the  intention  was  honest,  or  that  the 
principal  suffered  no  loss  by  the  transaction,  makes  no 
difference.  (§§  65,  66.) 

Such  a  transaction  is  not,  however,  void,  but  is  voida- 
ble at  the  option  of  the  defrauded  party,  and  may  be 
ratified  by  him.  (§  67.)  And  where  the  principal  knows 
that  the  agent  is  acting  in  his  own  behalf,  the  transac- 
tion is  valid.  (§§  68,69.) 

Where  others  combine  with  the  broker  to  carry 
through  a  transaction  in  the  profits  of  which  the  broker 
is  secretly  interested,  they  may  all  be  liable  for  fraud  or 
deceit.  Such  a  combination  is  usually  sought  to  be  held 
liable  on  the  theory  of  a  conspiracy.  (§  70.)  Sharing 
in  the  benefits  of  such  a  transaction  makes  one  liable, 
even  though  unaware  of  the  wrong  committed.  (§  71.) 

In  New  York,  a  conspiracy  to  defraud  another  out  of 
property  by  criminal  means  is  a  misdemeanor.  And  so 
is  corrupt  influencing  of  an  agent.  And  under  the  New 
York  statute,  an  agent  may  also  commit  a  misdemeanor 
by  accepting  a  gratuity  or  a  promise  under  an  under- 
standing that  he  shall  act  in  a  particular  manner  in  his 
principal's  business.  (§  70.) 

58 


BROKER'S  RIGHT  TO  INTEREST  IN  PROFITS.  59 

§  60.    Agent  Must  Act  in  Interest  of  Principal. 

A  person  may  agree  with  the  owner  of  property  to 
buy  it  at  a  certain  price,  and  then  turn  around  and  agree 
to  sell  it  to  somebody  else  at  an  advanced  price,  and 
may,  as  a  matter  of  right,  make  all  he  can  so  long  as  the 
purchaser  gets  all  he  bought,  and  pays  no  more  than  he 
agreed  to  pay,  and  is  not,  in  fact,  damaged. 

But  this  rule  does  not  apply  where  the  person  who 
makes  the  profit  is  the  agent  of  either  party  and  makes 
the  profit  out  of  the  party  whom  he  represents.1  "  It  is 
the  unquestionable  duty  of  an  agent  to  act  in  matters 
touching  the  agency  with  a  sole  regard  to  the  interests 
of  his  principal.  The  agent  in  accepting  the  employ- 
ment undertakes  to  manage  the  interests  confided  to  him 
and  discharge  the  trust  reposed  in  him  to  the  best  of  his 
ability  for  the  benefit  of  his  principal."  2 

Some  cases  go  to  the  length  of  holding  that  the 
broker  may  not  accept  part  of  the  commission  of  the 
broker  acting  for  the  other  party.3 

On  the  other  hand,  in  Alvord  v.  Cook,  174  Mass.  120 
(1899),  the  plaintiffs,  while  acting  as  the  defendants' 
brokers,  made  an  agreement  with  a  person  acting  as 
broker  for  the  other  party  to  an  exchange  that  the  bro- 
kers for  the  contracting  parties  should  share  equally  the 
commissions  obtained  on  both  sides.  It  was  claimed 
that  this  arrangement  was  not  known  to  the  defendants, 
and  was  a  fraud  upon  them.  The  arrangement  was  not 
such  as  to  make  the  respective  brokers  partners,  and  it 
did  not  appear  whether  the  commissions  of  the  respective 
brokers  were  to  be  lump  sums  or  percentages,  or  whether 
they  were  to  be  equal  in  amount. 

The  court  said :  "  It  is  easy  to  conceive  of  an  arrange- 

»  Helberg   v.    Nichol,    149    111.    249    (1894). 

2  Price  v.  Kejes,  C2  N.  V.  382  (1875);  Kinjrsley  v.  Wheeler,  95  Minn.  302  (1905); 
Leathers  v.  CanfleUl,  45  L.  R.  A.  33  (Mich.  1898). 

s  See  Plotner  v.  Chillson,  95  Pac.  777  (1908),  (citing  McKinley  v.  Williams,  74 
Fed.  95;  20  C.  C.  A.  313). 


60  POWERS,   AUTHORITY  AND   RIGHTS   OF   BROKER. 

ment  between  brokers  for  sharing  the  commissions  which 
would  put  one  of  them  under  a  temptation  to  act  ad- 
versely to  the  interest  of  his  client,  and  perhaps  it  is 
easier  to  conceive  of  such  an  arrangement  than  of  one 
not  having  such  an  effect,  but  we  are  not  prepared  to  say 
that  necessarily,  as  matter  of  law,  every  arrangement 
between  brokers  to  share  commissions  changes  the  rela- 
tion they  hold  to  their  principals,  either  by  putting  them 
under  an  additional  or  different  temptation  than  that 
arising  out  of  the  nature  of  the  employment  or  otherwise, 
and  is  therefore  invalid. 

' '  In  this  case  there  was  an  exchange  of  property,  and 
it  is  fair  to  assume  that  the  property  upon  each  side  was 
substantially  of  the  same  value;  and  it  does  not  appear 
that  the  commissions  were  unequal. 

' '  The  defendants  fail  to  show  that,  upon  the  facts  of 
this  case,  either  broker  was  placed  by  this  arrangement 
in  any  better  or  worse  condition  than  without  it,  or  that 
in  any  way  he  was  subjected  to  any  other  or  different 
temptation  to  act  adversely  to  the  interests  of  the  prin- 
cipal than  that  naturally  and  ordinarily  arising  out  of 
the  nature  of  his  employment." 

If  the  person  who  makes  the  profit  is  not  the  agent  of 
either  party,  it  seems  no  inference  may  be  drawn  from 
the  fact  that  he  ascertained  first  whether  the  purchaser 
would  give  a  certain  amount  before  the  party  who  makes 
the  profit  agrees  to  buy  the  property  at  a  less  amount.4 

§  61.    Agent  Must  Not  Be  Personally  Interested. 

"  It  is  established  by  the  authority  of  elementary 
writers  and  by  a  long  course  of  decisions  that  a  person 
employed  as  an  agent  in  any  respect  cannot  be  held  to 
act  for  his  own  benefit,  and  must  account  to  his  principal 
for  any  profit  he  may  have  made  in  the  transaction. ' ' 5 

« Healey   v.    Martin,   33   Misc.    236    (N.    Y.    1900). 
BCarruthers   v.    Diefendorf,    66  App.    Div.    33    (N.    Y.    1901). 


BECKER'S  EIGHT  TO  INTEREST  IN  PROFITS.  61 

In  Fellows  v.  Northup,  39  N.  Y.  122  (1868),  the  court 
said:  "  The  rule  is  well  settled  also  that  an  agent  can 
have  no  personal  interest  in  the  subject-matter  of  the 
agency,  and  cannot  aat  when  he  is  so  concerned.  The 
law  of  agency  proceeds  upon  the  idea  that  the  agent  is 
devoted  to  the  interests  of  his  principal,  and  that  his 
judgment,  his  feelings  and  his  interests  all  concur  in 
the  discharge  of  his  duty.  An  agent  employed  to  sell 
cannot  buy.  An  agent  employed  to  buy  cannot  himself 
be  the  seller,  nor  can  a  trustee  be  interested  in  the  sub- 
ject of  the  trust."6 

§  62.    Agent  May  Not  Also  Act  as  Principal. 

In  Clark  v.  Bird,  66  App.  Div.  284  (N.  Y.  1901),  the 
court  quotes  from  Story  on  Agency  to  the  effect  that 
"  an  agent  employed  to  sell,  cannot  himself  become  the 
purchaser;  and  an  agent  employed  to  buy,  cannot  him- 
self be  the  seller.  So  an  agent,  employed  to  purchase, 
cannot  purchase  for  himself. ' ' 7 

In  Wheeler  v.  Bell,  88  Hun  100  (N.  Y.  1895),  the  then 
General  Term  of  the  Supreme  Court  in  New  York  re- 
fused to  interfere  with  a  verdict  against  real  estate  bro- 
kers who  secured  an  option  for  a  certain  price  and  then 
turned  the  property  over  to  their  principal  at  an  in- 
creased price.  An  agent  to  sell  cannot  himself  become 
the  purchaser,  and  one  who  undertakes  to  act  for  another 
in  any  matter  cannot  in  the  same  matter  act  for  himself.8 

"  Where  one  undertakes  to  act  as  agent  for  another 
in  the  sale  of  property  the  rule  is  inflexible  that  he  vio- 
lates his  trust  by  becoming  the  purchaser  from  his  prin- 
cipal, unless  the  assent  of  the  latter  is  established  by  most 

8  Gardner  v.  Ogden,  22  N.  Y.  327  (1860),  reviews  many  of  the  authorities.  See 
also  Vol.  2,  Abb.  N.  Y.  Cy.  Dig.,  632. 

7  Citing  Dutton  v.  Wlllner,  52  N.  Y.  312;  Conkey  v.  Bond,  36  N.  Y.  427;  Ten 
Eyck  v.  Craig,  62  N.  Y.  406.  419.  See  also  Finch  v.  Conrade,  154  Pa.  St.  326  (1893); 
Cornwell  v.  Foord,  96  111.  App.  366  (1901);  Albertson  v.  Fellows,  45  N.  J.  Eq.  310; 
Amlck  v.  Butler,  111  Ind.  518. 

s  Bain    v.    Brown,    56    X.    Y.    285    (1874). 


62  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

convincing  proof.  This  principle  is  based  upon  good 
morals  and  good  sense.  As  was  said  by  Judge  Story  in 
his  work  on  Agency  (§  210) :  '  It  may  be  correctly  said, 
with  reference  to  Christian  morals,  that  no  man  can  faith- 
fully serve  two  masters  whose  interests  are  in  conflict. 
If,  then,  the  seller  were  permitted,  as  the  agent  of  an- 
other, to  become  the  purchaser,  his  duty  to  his  principal 
and  his  own  interest  would  stand  in  direct  opposition  to 
each  other ;  and  thus  a  temptation,  perhaps  in  many  cases 
too  strong  for  resistance  by  men  of  flexible  morals  or 
hackneyed  in  the  common  devices  of  worldly  business, 
would  be  held  out  which  would  betray  them  into  gross 
misconduct,  and  even  into  crime.  It  is  to  interpose  a 
preventive  check  against  such  temptations  and  seduc- 
tions that  a  positive  prohibition  has  been  found  to  be 
the  soundest  policy,  encouraged  by  the  purest  precepts 
of  Christianity.'  "9 

§  63.    Agent  May  Not  Make  Secret  Profits. 

A  real  estate  broker  who  receives  a  price  in  excess  of 
that  reported  and  accounted  for  to  his  principal  is  liable 
to  the  principal  for  the  difference.10  And  so  a  real  estate 
agent  who  induces  the  owner  to  fix  a  net  price  upon  cer- 
tain property  upon  the  supposition  that  a  sale  is  to  be 
made  to  a  third  party  cannot  himself  purchase  the  prop- 
erty and  by  such  transaction  realize  a  greater  profit  than 
a  reasonable  commission.11 

This  doctrine  was  enforced  in  the  New  York  courts 
in  Bain  v.  Brown,  56  N.  Y.  285  (1874), 'in  which  an  agent 
authorized  to  sell  real  estate  of  his  principal  contracted 
to  sell  the  same  for  $17,000  and  advised  his  principal  of 
the  sale.  The  next  day,  other  parties  applying  to  pur- 
chase the  property,  he  opened  negotiations  for  a  sale  to 

•Clark  v.    Bird,   66  App.    Div.    284    (N.   Y.    1901). 

»°  Babcock   v.    De  Mott,    160   Fed.    882    (1908). 

"Merriam   v.    Johnson,    86   Minn.    61;    90   N.    W.    116    (1902). 


BROKER  *S   RIGHT   TO   INTEREST   IN   PROFITS.  63 

them  which  resulted  in  his  giving  his  own  name  as  ven- 
dor and  selling  the  property  for  $26,000.  He  then  took 
an  assignment  of  the  first  contract,  and  procured  his 
principal  to  deed  direct  to  the  parties  with  whom  he  had 
contracted,  on  the  representation  that  the  purchaser  un- 
der the  first  contract  had  assigned  to  them.  The  price 
to  be  paid  under  the  second  contract  he  did  not  communi- 
cate to  his  principal.  He  received  the  $26,000,  account- 
ing to  his  principal  only  for  the  $17,000.  In  an  action 
to  recover  the  balance  the  Court  of  Appeals  held  that, 
assuming  the  first  sale  to  have  been  in  good  faith,  the 
agent  could  not  rightfully  appropriate  to  himself  the 
advance  upon  the  second  sale,  but  that  the  principal  was 
entitled  to  the  benefit  thereof.  The  officers  of  a  corpora- 
tion are  its  agents,  and  the  rule  applies  to  them.12 

Where  the  broker  is  to  receive  for  his  compensation 
all  in  excess  of  a  fixed  net  price,  it  has  been  said  that  he 
need  not  disclose  to  the  vendor  the  terms  of  the  sale.13 

§  64.    Broker's  Employees  Governed  by  Same  Rules. 

The  same  principles  apply  to  a  clerk  of  the  broker. 
Whatever  duty  the  broker  owes  to  the  seller,  the  clerk 
equally  owes  the  same.  The  disability  extends  to  all 
persons  who  being  employed  or  concerned  in  the  affairs 
of  another  acquire  a  knowledge  of  his  property.  "  The 
honesty  and  fairness  of  transactions  between  principals 
and  their  agents  demand  a  firm  adherence  to  these  rules, 
and  to  bring  within  their  operation,  not  only  the  agent 
himself  but  those  in  his  immediate  employ,  and  who  are 
engaged  in  the  transaction  of  his  business,  which  is,  nec- 
essarily, the  business  of  the  agent's  principal."14 

"McCloskey  v.  Goldman.  62*  Misc.  464  (N.  Y.  1909).  And  see  Pry  T.  Platt, 
32  Kans.  62  (1884),  where  the  agent  sold  to  his  own  partner.  Cf.  Boqua  v.  Marshall, 
114  S.  W.  714  (Ark.  1908). 

"Fulton   v.   Walters,   216  Pa.   St.   56    (1906). 

"Gardner  T.  Ogden,  22  N.  Y.  349,  350  (1860);  Powers  v.  Black,  159  Pa.  St. 
153  (1893). 


64  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

§  65.    Rule  Not  Affected  by  Agent's  Honesty  of  Pur- 
pose. 

It  is  no  answer  to  a  complaint  that  brokers  have  acted 
for  themselves  in  a  transaction  involving  their  principal, 
that  their  intention  was  honest  and  that  the  brokers  did 
better  for  their  principal  by  selling  him  their  own  prop- 
erty than  they  could  have  done  by  going  into  the  open 
market.  The  rule  is  inflexible,  and  although  its  viola- 
tion in  the  particular  case  cause  no  damage  to  the  prin- 
cipal, he  cannot  be  compelled  to  adopt  the  purchase.15 
The  fact  that  the  agent  volunteered  his  agency  does  not 
absolve  him  from  the  duty  of  fidelity.  Neither  is  it  ma- 
terial to  inquire  whether  the  agent  had  any  actual  fraud- 
ulent purpose.  The  making  of  a  purchase  from  himself 
without  authority  from  his  principal  is  a  constructive 
fraud  in  view  of  the  fiduciary  relation.16 

§  66.    Act  of  Agent  in  His  Own  Interest  Presumed  In- 
jurious. 

"  It  is  a  well-settled  principle  of  morals  as  well  as 
of  law  that  the  agent  must  faithfully  serve  his  principal. 
However  unquestioned  may  be  the  honesty  of  the  agent, 
or  his  impartiality  between  his  own  interests  and  those 
of  his  principal,  he  is  bound  to  the  exercise  of  all  his 
skill,  ability  and  industry  in  favor  of  his  principal.  As 
an  agent  to  sell,  it  is  his  duty  to  get  the  highest  fair 
price;  and  this  duty  is  wholly  incompatible  with  his  wish 
to  buy.  In  every  trust  this  principle  prevails.  No  agent 
or  trustee  can  deal  with  the  subject-matter  of  his  trust, 
except  for  the  benefit  of  his  principal  *  *.  And 
the  rule  in  equity  is,  that  any  act  by  an  agent  in  respect 

"Tausslg  v.  Hart,  58  N.  Y.  425  (1874);  Hare  v.  De  Yonng,  39  Misc.  368  (N. 
Y.  1902)  ;  Mullen  v.  Bower.  22  Ind.  App.  302.  303  (1898),  (citing  Clendenon  v.  Pan- 
coast,  75  Pa.  St.  213 ;  Soule  v.  Deering,  87  Me.  365 ;  32  Atl.  998 ;  Hammond  v.  Book- 
waiter.  12  Ind.  App.  177;  Everhart  v.  Searle,  71  Pa.  St.  256;  Pratt  v.  Patterson's  Ex., 
112  Pa.  St.  475;  3  Atl.  858;  Wadsworth  v.  Adams,  138  U.  S.  380). 

"Conkey  v.  Bond,  36  N.  Y.  427  (1867).  See  also  Porter  v.  Woodruff,  36  N.  J. 
Eq.  174. 


BROKER'S  RIGHT  TO  INTEREST  IN  PROFITS.  65 

to  the  subject-matter  of  the  agency,  injurious  to  the  prin- 
cipal, may  be  avoided  by  the  principal,  and  where  an 
agent  to  sell  becomes  the  purchaser,  the  court  will  pre- 
sume that  the  transaction  was  injurious,  and  will  not 
permit  the  agent  to  contradict  the  presumption.17  The 
policy  of  this  rule  is  obvious.  The  confidence  reposed  in 
the  agent  must  not  be  abused.  His  position  of  trust 
must  not  be  employed  to  his  own  advantage,  or  to  the 
injury  of  his  principal.  In  short,  while  in  the  employ- 
ment of  his  principal,  his  principal's  interest  must  be  his 
interest,  and  he  may  have  no  interest  which,  conflicting 
with  those  of  his  principal,  can  work  injury  to  the 
latter."18 

§  67.    Act  of  Agent  in  His  Own  Interest  Voidable,  but 
May  Be  Ratified. 

Such  a  transaction  is  voidable  at  the  election  of  the 
defrauded  party,  and  if,  with  full  knowledge  of  all  the 
facts,  he  deliberately  and  freely  ratifies  the  act  of  the 
agent,  he  thereby  waives  his  right  to  repudiate  it.  Rati- 
fication between  the  original  parties,  however,  implies  a 
conscious  and  intended  approval  of  the  act  done.  It 
rests  in  the  intention.  That  intention  is  generally  one  of 
fact  to  be  deduced  from  all  the  circumstances.19 

§  68.    Agent  May  Be  Personally  Interested  with  Con- 
sent of  Principal. 

While  the  general  rule  that  an  agent  cannot  himself 
be  interested  in  a  deal  holds,  yet  the  agent  may  be  per- 
sonally interested  therein  if  the  principal  knows  of  the 
facts.20  But  the  mere  fact  that  the  property  was  to  be 
sold  at  a  fixed  price  does  not  make  the  rule  inapplica- 

"  Citing  Coles  v.   Thecothick.   9   Ves.   234.   247. 

«  McDonald  v.   Lord,   26  How.   Pr.   407    (N.   Y.    1864). 

19  Clark  v.   Bird.  60  App.    Div.   284    (N.   Y.   1901).     See  §§  68,   69  infra. 

»Klngsley   v.   Wheeler,    95   Minn.    363    (1905). 


66  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

ble.21  "  It  is  not  always  the  case  that  a  broker  may  not 
purchase  for  himself.  If  it  is  apparent  that  in  making 
the  purchase  his  object  is  to  acquire  title  for  himself, 
and  the  seller  contracts  with  him  with  a  knowledge  of 
this  fact,  or  the  facts  connected  with  his  purchase  are  of 
such  a  character  that  notice  could  be  implied  that  he  was 
dealing  with  the  broker  as  purchaser,  and  not  as  his 
broker,  we  see  no  reason,  in  such  a  case,  for  the  applica- 
tion of  the  rule  that  an  agent  will  not  be  permitted,  to 
his  own  advantage,  to  deal  with  the  property  of  his  prin- 
cipal."22 

« 

§  69.    Broker  Without  Discretion  as  Disclosed  Principal 
or  Subsequent  Purchaser. 

In  Pomeroy  v.  Wimer,  167  Ind.  440  (1906),  the  court, 
at  pages  450-452,  first  discusses  the  rule  that  an  agent 
with  discretionary  power  to  sell  or  exchange  must  exer- 
cise that  discretion  for  the  sole  benefit  of  his  principal, 
but  where  he  acts  as  a  mere  middleman  he  may  act  for 
both  parties.23  The  court  then  said :  "  If  an  agent,  under 
the  limitations  and  terms  above  stated,  may  act  for  both 
parties,  and  recover  compensation  from  both,  there  can 
be  no  sound  reason  why  one  who  engages,  under  similar 
restrictions,  to  find  a  purchaser  or  trader  for  another 
may  not  himself  become  the  purchaser  or  trader,  as  well 
as  a  stranger,  provided  that  in  doing  so  he  violates  no 
obligation,  and  fully  discloses  to  his  employer  his  per- 
sonal relations  to  the  subject-matter.  The  fact  that  he 
has  undertaken,  to  find  a  purchaser  for  the  property  does 
not  impress  upon  the  agent  any  particular  incapacity  to 
buy  or  trade  for  the  property  himself,  nor  make  a  trade 
with  him  less  profitable  to  his  employer.  And  if  the 
principal,  with  full  knowledge  of  all  the  material  facts 

21  Ruckman   v.    Bergholz,   37    N.    J.    L.   441    (1874). 

22  Texas  Brokerage  Co.  v.  Barkley,  109  S.  W.  1002  (Tex.  1908). 

23  See  §§  48-57  supra. 


BROKER'S  RIGHT  TO  INTEREST  IN  PROFITS.  67 

concerning  the  transaction,  enters  into  negotiations  with 
him  and  consummates  a  trade,  the  transaction  is  valid 
and  the  agent  entitled  to  his  compensation.24  In  the 
case  of  Stewart  v.  Mather,  32  Wis.  344  (1873),  it  is  said: 
'  Where  the  broker  merely  engages  to  find  a  purchaser 
at  such  price  as  may  be  agreed  upon,  if  he  presents  him- 
self as  such  purchaser  and  the  seller,  with  full  knowledge 
of  that  fact,  so  receives  and  enters  into  negotiations  with 
him  and  a  sale  is  consummated,  the  broker  may  recover 
his  commissions.'  : 

In  another  case,25  it  was  held  that  when  the  agent  has 
fully  discharged  his  trust  and  sold  property  to  a  third 
person  in  good  faith,  having  no  interest  in  the  same  at 
the  time,  he  may  afterwards  acquire  the  title  from  the 
purchaser,  and  such  fact,  or  the  fact  that  his  wife  ac- 
quired the  title,  will  not  afford  ground  for  avoiding  the 
sale. 

§  70.    Broker  May  Not  Lawfully  Combine  with  Others 
to  Secure  Secret  Profits. 

Sometimes  others  combine  with  the  broker  in  putting 
through  a  deal  in  which  the  broker  is  secretly  to  share 
in  the  profit  of  a  sale  to  or  purchase  from  his  principal.26 
Again,  at  other  times,  a  broker  may  use  a  ' '  dummy  ' '  to 
represent  either  a  supposed  buyer  or  seller,  as  the  case 
may  be,  in  endeavoring  to  or  in  actually  putting  through 
such  a  deal. 

The  principles  which  govern  an  action  for  fraud  and 
deceit  are  the  same,  whether  the  fraud  is  alleged  to  have 
originated  in  a  conspiracy  or  to  have  been  solely  com- 
mitted by  a  defendant  without  aid  or  co-operation. 

"Citing  Rochester  v.  Levering.  104  Ind.  562  (1886);  Stewart  v.  Mather,  32  Wls. 
344  (1873);  1  White  &  Tudor's  Leadg.  Cases  in  Equity,  Part  1.  p.  219;  Burke  v. 
Bonrs.  98  Cal.  171  (1893)  ;  32  Pac.  980;  1  Clark  &  Skyles  on  Agency,  §  413;  1  Am.  & 
Eng.  Ency.  Law  (2nd  Ed.),  1081. 

25  Board  of  Trustees  v.  Blair,  45  W.  Va.  820  (1899),  (citing  Walker  v.  Carrington, 
74  111.  446). 

38  See,  for  Illustration,  Emmons  v.  Alvord,  177  Mass.  466  (1901).  And  see  J§  251- 
256  infra. 


68  POWERS,   AUTHORITY   AND   RIGHTS   OP   BROKER. 

Where  fraudulent  profits  are  secured  by  means  of  com- 
bination, its  members  are  usually  sought  to  be  held  liable 
on  the  ground  of  conspiracy. 

In  New  York  a  conspiracy  to  defraud  another  out  of 
property  by  criminal  means  is  a  misdemeanor,  as  is  also 
corrupt  influencing  of  an  agent  and  the  acceptance  by  an 
agent  of  a  gratuity  or  a  promise  to  influence  his  acts 
towards  his  principal's  business. 

The  whole  matter  of  fraudulent  acts  of  brokers  is  con- 
sidered at  length  in  Part  IV  of  the  present  work.  For 
a  consideration  of  the  liability  of  the  broker  and  the  prin- 
cipal see  Part  III  of  the  present  volume,  Chapters  XXVI- 
XXVm  infra. 

» 
§  71.    Person  Sharing  Benefits  Liable  though  Unaware 

of  Fraud. 

The  legal  rights  and  liabilities  of  parties  may  be  af- 
fected by  the  acts  and  representations  of  others  of  which 
they  had  no  knowledge,  where  they  have  received  the 
benefit  of  the  contracts  induced  by  such  acts  and  repre- 
sentations.27 

An  agent  cannot  be  interested  in  the  profit  of  a  sale 
to  his  principal,  and  even  though  a  person  is  not  a  party 
to  an  agreement  to  share  the  profit,  he  becomes  liable  to 
account  under  an  allegation  that  he  received  and  kept  a 
share  of  the  profit.28  The  defrauded  party's  right  of  re- 
covery does  not  depend  upon  any  conscious  participation 
of  the  ' '  dummy  ' '  or  the  gainer  in  the  alleged  fraud,  nor 
upon  his  accepting  the  fruits  of  it  with  knowledge  that 
it  was  committed.  The  burden  of  proof  is  on  the  gainer 
to  show  the  fairness  and  honesty  of  the  transaction.29 


»  Dutton  v.  Willner,  52  N.  Y.  317  (1873).  See  the  fuller  discussion  of  this  sub- 
ject in  §§  254-256,  261  infra. 

as  Colonizers  Realty  Co.  v.   Shatzkin.   129  App.   Div.  609   (N.  Y.    1908). 

»Ringler  v.  Reynolds,  18  N.  Y.  Suppl.  877;  46  N.  Y,  St.  Rep.  612  (1892);  aff'd, 
without  opinion.  139  N.  Y.  613  (1893). 


CHAPTER  VII. 
GENERAL  AUTHORITY  OF  BROKER. 

§  72.    General  Statement. 

As  a  general  rule  the  broker  has  no  authority  to  sign 
a  contract  of  sale  for  his  employer.  (§  27.) 

A  broker  employed  to  sell  property  has  no  authority, 
as  such,  to  receive  payment  therefor.  Such  authority 
may,  however,  be  expressly  given,  or  may  be  implied 
where  the  broker  has  possession  of  the  property,  or  as- 
signments of  it,  or  other  indicia  of  authority  for  its 
transfer.  (§  73.) 

Where  there  is  no  authority  for  employment  of  sub- 
agents,  either  express  or  implied,  and  the  broker  employs 
other  brokers  for  his  own  convenience,  no  privity  of  con- 
tract arises  between  the  principal  and  such  subagents, 
but  subsequent  ratification  of  the  employment  of  the  sub- 
agent  has  in  some  cases  been  held  sufficient  to  permit  a 
recovery  direct  from  the  principal.  (§  74.) 

A  renting  agent  is  usually  given  authority  to  rent 
property,  to  receive  the  rent,  and  give  receipts  in  the 
name  of  the  landlord,  and  also  to  allow  deductions  from 
the  rent  for  the  expense  of  minor  repairs,  janitor  serv- 
ice, etc.,  but  has  no  authority  to  execute  a  lease  unless 
such  authority  is  expressly  given  him.1  (§75.)  A  rent- 
ing agency  is  terminated  by  the  death  of  the  principal. 
(§  76.) 

In  New  York,  the  agent  of  the  landlord  may  institute 
dispossess  proceedings.  (§  77.) 

Real  estate  brokers  who  carry  on  a  general  insurance 

»  See  N.  Y.  Real  Prop.  Law— Cons.  Laws,  Ch.   50,   §§  242,  259. 

69 


70  POWEBS,   AUTHOEITY   AND   RIGHTS   OF   BROKER. 

business  are  usually  not  the  agents  of  the  insurance  com- 
pany, but  are  regarded  as  the  agents  of  the  insured. 
(§  78.) 

§  73.    Agent's  Authority  to  Receive  Payment  for  Prop- 
erty Sold. 

"  The  general  doctrine  is,  that  a  broker  employed  to 
sell  has  no  authority  as  such  to  receive  payment.  Ex- 
ception is  made  to  this  general  rule  in  some  cases  where 
the  principal  is  not  disclosed. ' ' 2 

"  A  factor  who  has  the  possession  of  property,  or 
who  has  assignments  of  it,  or  other  indicia  of  authority 
to  transfer  it,  has  implied  power  to  receive  the  purchase 
price  for  the  vendor  when  he  sells  and  delivers  the  prop- 
erty, or  the  title  deeds  to  it.3  But  a  broker  or  other 
agent  to  sell  property  who  has  concluded  a  contract 
of  sale,  which  is  to  be  performed  by  a  delivery  of 
the  property,  or  the  title  deeds  to  it,  and  the  simul- 
taneous payment  of  the  purchase  price  at  some  future 
time,  and  who  is  not  intrusted  with  the  possession 
of  the  property,  or  of  the  conveyance  of  it,  has  no 
implied  authority  to  collect  the  purchase  price,  or  to  ex- 
tend its  time  of  payment,  or  to  otherwise  modify  the 
contract  between  the  vendor  and  the  purchaser. ' ' 4 

§  74.    Broker's  Power  to  Employ  Other  Brokers. 

Where  a  broker  is  authorized  to  sell  property  and 
engages  another  broker  to  help  him,  and  agrees  to  divide 
the  commissions  in  case  of  a  sale,  the  latter  cannot  re- 
cover commissions  from  the  owner  of  the  property,  or 
from  the  employer  of  the  first  broker,  but  must  look  to 

•  Higgins  Y.   Moore.  34  N.   Y.  419   (1866).     See  also  eases  under  §  46. 

»  Citing  Pickering  v.   Busk.   15  East.  38  ;   Baring  v.  Corrie,  2  Barn.  &  Aid.   137,   148. 

« Adams  v.  Fraser.  82  Fed.  213  (1897),  (citing  Butler  v.  Darman.  68  Mo.  298, 
301;  Seiple  v.  Irwln,  30  Pa.  St.  513;  Halmenfeld  v.  Wolff,  (Com.  PI.),  36  N.  Y.  Supp. 
473;  Clark  v.  Murphy,  164  Mass.  490;  41  N.  E.  674;  Higgins  v.  Moore,  34  N.  Y.  417. 
419;  Kane  T.  Barstow  (Kans.  Sup.),  22  Pac.  588). 


GENERAL   AUTHORITY   OF   BROKER.  71 

the  broker  who  gave  him  the  property  for  sale.5  This, 
some  authorities  say,  is  so,  because  an  agent  in  charge  of 
property  and  authorized  to  sell  the  same  has  no  power, 
as  a  matter  of  law,  to  delegate  his  authority  to  another 
person  or  employ  a  subagent.  Thus,  in  Groscup  v. 
Downey,  105  Md.  277  (1907),  the  court  said:  "  The  law 
is  firmly  settled  that  ordinarily  an  agent  has  no  power  to 
delegate  his  authority  to  another  or  to  employ  a  sub- 
agent  in  the  absence  of  an  express  or  implied  authority 
to  do  so  from  his  principal.  This  is  especially  true  where 
the  execution  of  the  power  conferred  upon  the  agent  in- 
volves the  exercise  of  judgment  or  skill.8  The  power 
to  an  agent  to  delegate  his  authority  may  be  implied  from 
a  variety  of  circumstances,  as  where  it  is  shown  that  the 
principal  contemplated  or  knew  that  the  agent  intended 
to  delegate  his  authority,  or  where  such  delegation  is  au- 
thorized by  custom,  usage,  the  course  of  trade  or  by  ne- 
cessity, or  where  the  acts  to  be  performed  are  merely 
mechanical  or  ministerial.7  If  the  authority  of  the  agent 
is  conferred  on  him  by  a  written  instrument,  the  con- 
struction of  the  instrument  and  the  determination  of  the 
nature  and  extent  of  the  agent 's  power  are  matters  of  law 
for  the  Court.  If  the  agency  grows  out  of  transactions 
in  pais  or  is  to  be  inferred  from  the  conduct  or  relation 
of  the  parties  to  each  other,  the  existence  of  the  agency 
and  the  nature  and  extent  of  the  agent 's  powers  are  ques- 
tions of  fact  to  be  found  by  the  jury  from  the  evidence 
before  them  under  proper  instructions  from  the  Court." 
And  it  has  been  held  that  even  if  the  acts  of  a  sub- 
agent,  who  has  been  employed  without  authority,  are 
afterwards  ratified,  he  can  recover  no  compensation  from 
the  principal,  but  must  look  to  the  agent.8  On  the  other 

s  Hill  v.  Morris,  ir,  Mo.  App.  330  (1884);  Watklns  Co.  v.  Thetford,  96  S.  W.  72 
(Tex.  I'.MH;  i. 

•  Citing  Mechem  on  Agency,  §  185  ;  Clark  &  Skyles  on  Agency,  p.  767  et  seq.  ;  Wil- 
son v.  York,  etc.,  R.R.  Co.,  11  O.  &  J.  74. 

7  ritlng  Clark  &  Skyles  on  Agency,  p.  770;  Mechem  on  Agency,  58  184-190. 

8  Carroll  v.  Tucker,  2  Misc.  397   (N.   Y.   1893);  Southack  v.  Ireland.   109  App.   Dlv. 
45    (N.   Y.    1905). 


72  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

hand,  there  is  authority  supporting  a  somewhat  contrary 
view,  while  courts  have  also  gone  to  the  length  of  seek- 
ing, in  some  instances,  sufficient  basis  for  permitting  the 
second  broker  to  recover  direct  from  the  owner  or  the 
first  broker's  employer,  on  the  ground  that  there  was  an 
independent  employment  of  the  second  broker  by  the 
owner. 

Where  one  broker  "  gives  "  the  property  to  another 
broker  and  after  unsuccessful  efforts  the  owner  deals  di- 
rect with  the  second  broker,  it  has  been  held  in  Peek  v. 
Slifer,  122  111.  App.  21  (1905),  that  the  first  broker  is 
not  entitled  to  commission,  the  employment  of  the  second 
broker  being  considered  an  independent  arrangement. 
The  word  "  gives  "  in  the  foregoing  sentence  is  used  in 
the  sense  in  which  it  has  become  popularized  among  real 
estate  brokers.  When  one  broker  informs  another  of 
the  fact  that  certain  property  has  been  placed  with  him 
for  sale,  it  is  usually  spoken  of  as  the  one  broker  "  giv- 
ing ' '  the  property  to  the  other.  It  is  evident,  of  course, 
that  the  meaning  is  that  he  gives  the  other  the  informa- 
tion. 

Where  one  broker  employed  another,  and  the  ar- 
rangement was  ratified  and  adopted  by  the  principal, 
the  court  permitted  a  recovery  by  the  second  broker  di- 
rect from  the  principal.9  But  in  this  case  the  facts 
were  that  the  principal  appointed  the  first  broker  as  the 
agent  to  sell  the  property  and  referred  the  second  broker 
to  such  agent,  and  the  case  went  on  the  theory  that  the 
first  broker  was  acting  as  the  agent  of  the  principal  in 
the  transaction,  a  situation  different  from  the  ordinary 
one  in  which  one  broker  transmits  to  another  the  prop- 
erty he  has  for  sale. 

In  Wefel  v.  Stillman,  44  So.  203  (Ala.  1907),  plaintiff 
was  employed  by  the  owner  to  sell  his  land.  Plaintiff 
employed  defendant,  also  a  broker.  Defendant  sold  the 

»Com.   &  Inv.  Co.   v.   Real  Estate  Co.,    120  Mo.  App.  437    (1906). 


GENERAL  AUTHORITY  OF  BROKER.  73 

land,  but  claimed  he  sold  it  under  a  direct  authority  from 
the  owner.  The  court  said:  "  The  appellee  insists  that 
the  appellant  was  estopped  from  setting  up  that  he  sold 
the  land  under  an  independent  contract  with  the  owner 
and  relies  on  the  general  equitable  doctrine  that  an  agent 
or  other  fiduciary  cannot  acquire  an  interest  in  the  sub- 
ject-matter of  the  agency  adverse  to  his  principal  which 
is  set  out  in  Waller  v.  Jones,  107  Ala.  341;  18  So.  277, 
and  in  S.  U.  N.  Co.  v.  Dangaix,  103  Ala.  394;  15  So.  956, 
and  other  cases.  But,  while  accepting  that  principle  to 
its  full  extent,  we  do  not  think  it  applies  here,  so  as  to 
prevent  the  owner  and  the  defendant  from  entering  into 
an  independent  contract.  Certainly  if  the  agency  be- 
tween defendant  and  plaintiff  was  limited  to  a  single 
purchaser,  the  relation  would  be  at  an  end  when  that  pro- 
posed purchase  fell  through ;  and  there  would  be  no  prin- 
ciple of  law  forbidding  a  contract  of  agency  between  the 
owner  of  the  property  and  the  defendant,  103  Ala.  394, 
et  seq.;  15  So.  958.  The  plaintiff  had  no  interest  in  the 
property.  At  most,  he  had  a  contract  allowing  him  to 
find  a  purchaser  for  the  land  by  his  own  efforts  or  those 
of  his  agents ;  and,  of  course,  if  he  authorized  the  defend- 
ant to  act  under  his  power,  and  the  defendant,  so  acting, 
found  a  purchaser,  the  plaintiff  would  be  entitled  to  share 
in  the  commission.  But  such  a  contract  is  unilateral, 
binding  upon  neither  party  until  the  defendant,  proceed- 
ing under  the  offer,  has  procured  a  purchaser.10  There 
was  a  right  in  the  owner  to  employ  other  persons  than 
the  plaintiff  to  sell,  and  a  right  in  the  defendant  to  contract 
independently  with  him;  and  if  he  did  in  fact  so  con- 
tract, not  proceeding  under  the  privilege  extended  by  the 
plaintiff,  it  would  be  a  renunciation  of  any  contract  re- 
lation with  the  plaintiff,  and  any  commissions  earned 
would  belong  to  the  defendant,  and  the  plaintiff,  at  most, 
would  have  to  sue  for  damages,  if  there  was  such  a  con- 

M  Citing  Sheffield  F.   Co.  v.   H.   C.   &  C.   Co.,   101   Ala.   477;   14   So.   672. 


74  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

tract  as  would,  on  its  breach,  support  an  action.  We  do 
not  think  the  principle  invoked  by  the  appellee  has  any 
application  to  this  case,  except  upon  the  factum  of  the 
defendant's  service  being  rendered  to  the  owner  for  the 
plaintiff,  or  in  pursuance  of  the  engagement  with  the 
plaintiff.  The  contract  between  plaintiff  and  defendant 
did  not  per  se  transfer  to  the  plaintiff  any  lien  or  prop- 
erty right  to  defendant's  labor,  or  put  any  obligation  on 
the  defendant  to  proceed  under  the  offer  extended  to  him 
by  the  plaintiff,  or  restrict  his  or  the  owner's  right  to 
contract  as  principals,  so  as  to  pass  any  property  right 
to  the  plaintiff  in  the  wages  of  defendant  in  a  service  to 
the  owner  under  an  independent  contract.  But,  of 
course,  any  breach  by  defendant  of  any  binding  contract 
with  the  plaintiff  gives  to  the  latter  a  plain  remedy  at  law 
for  his  full  damages. ' ' 

If  the  owner  lists  property  with  the  broker  for  sale 
and  authorizes  the  broker  to  relist  the  land  with  other 
brokers,  the  latter,  in  order  to  recover  from  the  owner 
direct,  must  show  the  authority  of  the  former  broker  to 
do  so,  or  that  after  the  first  broker  placed  the  land  with 
the  second  brokers  the  owner,  being  aware  of  such  fact, 
consented  to  the  latter  brokers  selling  the  land.11 

Where  one  broker  is  given  the  property  to  sell,  and 
he  employs  another  broker  to  sell  it,  and  agrees  to  divide 
the  commission,  the  latter  broker  may  recover  his  share 
of  the  commission  from  the  former.12 

But  where  there  is  no  agreement  between  the  brokers 
to  divide  commissions,  nor  anything  from  which  such  an 
agreement  may  be  implied,  the  sub  agent  cannot  recover 
from  his  employer,  the  other  broker,  merely  upon  proof 
that  where  two  brokers  bring  about  a  deal  it  is  customary 
to  divide  the  commissions.  Usage  cannot  create  a  con- 
tract.13 

"Sterling   v.    De   Lanne,    105   S.   W.    1169    (Tex.    1907). 
"Kaufman   T.   Bloch,   5   Misc.   404    (N.   Y.    1893). 
"Hedenberg  T.  Seeberger,   140  111.  App.  618  (1908). 


GENERAL  AUTHORITY  OF  BROKER.  75 

§  75.    Renting  Agents. 

The  ordinary  agency  to  collect  rents  usually  includes 
authority  to  rent,  to  receive  rent  money  and  receipt  there- 
for in  the  name  of  the  landlord;  also  to  allow  deductions 
from  the  rent  for  cost  of  minor  repairs,  janitor  service, 
etc.,  but  does  not  include  authority  to  execute  a  lease 
unless  such  authority  is  expressly  conferred.  The  extent 
of  the  agent 's  power  is  usually  agreed  upon,  or  otherwise 
is  established  by  the  acts  of  the  agent  ratified  by  the 
principal.  A  renting  agent  is  not  liable  for  failure  to 
rent  property  in  the  absence  of  proof  that  he  could 
with  reasonable  diligence  have  rented  it  to  any  person 
who  could,  or  would,  have  paid  any  rent  therefor.14 
Where  the  meaning  of  the  agreement  is  uncertain,  proof 
of  custom  is  admissible  to  show  that  a  renting  agent  is 
responsible  for  the  care  of  the  property  while  vacant, 
under  an  agreement  to  take  * '  care  ' '  of  the  property  for 
a  commission  on  collections.15 

An  agent  to  rent  premises  and  collect  rent,  where  the 
lease  is  for  a  term  of  more  than  one  year  and  under  seal, 
has  no  implied  power  to  consent  to  the  substitution  of  a 
new  tenant.16  And  an  agent  in  regard  to  the  collection 
of  rent  and  the  ordinary  repairs  that  a  real  estate  agent 
makes  in  behalf  of  the  owner  has  no  power  to  agree 
to  pay  for,  or  even  to  authorize,  extensive  improve- 
ments, such,  for  instance,  as  the  removal  of  partitions 
for  the  purpose  of  changing  a  number  of  small  rooms 
into  larger  rooms  and  painting  and  plastering  these 
rooms.17  "An  agent  authorized  to  receive  payment  can 
receive  it  in  money  only.  Ordinarily  he  can  receive 
it  when  it  becomes  due  and  not  before.  He  cannot 
commute  the  debt  for  another  thing.  He  cannot  com- 
pound the  debt,  or  release  it  on  composition,  or  sub- 

"Burpe  v.   Van   Eman,    11  Minn.   327   (1866). 
15  Cameron   v.    Real   Est.    Co..   76   Mo.    App.   366    (1898). 
"Wallace  v.   Dinnlny.    11    Misc.   317    (N.   Y.   1895). 
"Garber  v.   Splvak,   65   Misc.   37    (N.   Y.   1909). 


76  POWERS,    AUTHORITY    AND    RIGHTS    OF    BROKER. 

mit  it  to  arbitration."18  An  agent  authorized  to  col- 
lect rents  is  not  to  be  presumed  to  have  authority  to 
receive  rents  before  they  are  due,  and  such  prepayment 
does  not  discharge  the  tenant  unless  the  landlord  ratifies 
the  payment  or  receives  the  money  paid.19 

§  76.    In  General,  Renting  Agency  Terminates  on  Death 
of  Principal. 

The  power  of  an  agent  to  collect  and  receive  payment 
of  rents,  when  such  power  is  not  coupled  with  an  interest, 
terminates  and  ceases  upon  the  death  of  the  principal. 
Payment  made  to  the  agent  after  the  principal's  death 
does  not  bind  the  estate  of  the  principal  though  the  pay- 
ment be  made  in  ignorance  of  the  principal's  death,  un- 
less perhaps  where  the  agent  has  accounted  for  same  to 
the  estate. 

"  The  rule  seems  to  have  originated  in  the  presump- 
tion that  those  who  deal  with  an  agent  knowingly  assume 
the  risk  that  his  authority  may  be  terminated  by  death 
without  notice  to  them.  The  case  of  an  agency  coupled 
with  an  interest  is  made  an  exception  to  the  rule. "  It  is 
possible,  however,  to  so  word  a  lease  that  the  personal 
representatives  or  the  estate  of  the  principal  may  be  es- 
topped from  recovering  money  paid  to  his  agent  in  good 
faith  after  his  death.20 

§  77.    Agent's  Right  to  Dispossess  Tenants.    New  York 
Rule. 

Section  2235  of  the  New  York  Code  of  Civil  Procedure 
expressly  authorizes  the  agent  of  the  landlord  to  make 
application  for  the  removal  of  the  tenant,  and  in  Case  v. 
Porterfield,  54  App.  Div.  109  (N.  Y.  1900),  it  was  held 

"Fellows    v.    Northup,    39    N.    Y.    121,    122    (1868). 
!»  Realty  Transfer  Co.   v.   Klmball,   66  Misc.    185    (N.   Y.    1910). 
20  Farmers'  L.  &  T.  Co.  v.  Wilson,  139  N.  Y.  284   (1893);  but  see  Kelly  v.  Bower- 
man,    113   Mich.   446. 


GENERAL   AUTHORITY   OF   BROKER.  77 

that  this  authority  included  the  right  to  entitle  the  pro- 
ceedings and  to  issue  the  precept  in  the  agent's  name.21 
The  proceedings  may  be  entitled  and  the  precept  issued 
in  the  name  of  the  agent  where  he  is  stated  in  the  petition 
to  be  the  agent  of  the  owners  in  fee  of  the  premises.22 

§  78.  Insurance  Brokers. 

Many  brokers  designate  themselves  "  real  estate  and 
insurance  brokers."  As  such,  they  usually  solicit  and 
receive  applications  for  insurance.  These  applications 
they  transmit  to  some  insurance  company  selected  by 
themselves  or  by  the  applicant  for  insurance.  Such  bro- 
kers are  in  law  regarded  as  the  agents  for  the  applicants 
and  not  as  agents  of  the  company.23 

There  are,  of  course,  brokers  who  write  insurance 
policies,— that  is,  are  authorized  by  the  company  to  ac- 
cept risks  and  write  and  issue  the  policies.  They  are 
usually  regarded  as  the  company 's  agents,  but  sometimes 
even  they  may  be  regarded  as  partly  the  company's 
agents  and  partly  the  agents  of  the  insured.  Some  poli- 
cies contain  special  provisions  as  to  who  are  to  be  re- 
garded as  the  company's  agents  and  by  whose  acts  and 
representations  the  company  is  to  be  bound. 

A  broker  who  effects  insurance  under  no  employment 
by  the  insurance  company,  but  for  a  commission  paid  by 
the  company  upon  the  premiums  received  for  such  risks 
as  he  procures  and  the  company  chooses  to  accept,  is  not 
an  agent  of  the  company.  And  notice  to  such  an  agent 
is  not  notice  to  the  company.24  And  so  an  insurance 
broker  soliciting  business,  whose  sole  office  is  to  deliver 
the  policy  and  collect  the  premium,  is  not  an  agent  of  the 
company  and  has  no  authority  to  bind  the  company.  If 

21  Powers  v.  De  O.,  C4  App.  Dlv.  373   (N.  T.   1901). 

22  Case   v.    Porterfield.    54    App.    Dlv.    109    (N.    Y.    1900). 

23  Hartford   Ins.   Co.    v.    Reynolds,   3«  Mioh.   502    (1877). 
"Devens  v.  Mechanics  &  T.  Ins.  Co.,  83  N.  Y.  168  (1880). 


78  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

he  is  merely  a  conduit  between  the  company  and  the  in- 
sured for  the  delivery  of  the  policy  and  its  renewals  and 
the  collection  of  the  premiums,  to  that  extent,  it  may  be 
said,  he  is  the  agent  of  the  company,  but  no  other  powers 
can  be  predicated  upon  those  acts.25 

In  some  states  licenses  are  required  to  carry  on  the 
business  of  insurance  broker. 

"Alien  v.  German  Am.  Ins.  Co.,   123  N.  Y.  6   (1890). 


CHAPTER   VIII. 
REVOCATION   OF   BROKER'S   AUTHORITY. 

§  79.    General  Statement. 

The  relation  of  principal  and  agent,  so  far  as  real  es- 
tate brokers  are  concerned,  may  be  terminated  in  any  of 
the  following  ways:  (1)  By  mutual  consent;  (2)  by  per- 
formance of  the  object  of  the  employment;  (3)  by  the 
pleasure  of  either  party  in  good  faith;  (4)  by  lapse  of 
time;  (5)  by  a  sale  of  the  property  through  means  other 
than  the  broker's  efforts;  (6)  by  the  destruction  of  the 
subject-matter;  (7)  by  bankruptcy;  (8)  by  the  insanity 
of  either  party;  (9)  by  the  death  of  either  party. 
(§§  80-92.)  The  fraud  of  the  agent  also  affects  his 
agency.  (§93.) 

The  agency  continues  as  to  third  persons  until  notice 
of  the  revocation.  ( §  94. )  But  death  revokes  the  agency 
as  to  third  persons,  without  notice.  (§  92.) 

§  80.    Termination  of  Agency  by  Mutual  Consent. 

It  needs  no  citation  of  authority  to  demonstrate  that 
the  principal  and  the  broker  may  put  an  end  to  their 
relation  by  mutual  consent.  For  whatever  the  parties 
may  do  by  agreement,  they  may  usually  undo  by  agree- 
ment. It  is  true  that  there  may  be  occasions  in  which  a 
dispute  may  arise  as  to  whether  the  agency  has  been  ter- 
minated by  mutual  consent.  But  these  occasions  are  de- 
pendent rather  on  questions  of  fact  than  on  law. 

§  81.    Termination  by  Performance  of  Object  of  Em- 
ployment. 

Again,  no  elaboration  is  required  to  show  that  the 
agency  is  terminated  by  performance  of  the  object  of  em- 

79 


80  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

ployment.  For,  if  the  agent  is  employed  to  find  a  pur- 
chaser and  finds  one,  or  if  he  is  engaged  to  purchase 
property  and  he  purchases,  the  contract  of  employment  is 
performed.  "  The  agency  of  a  real  estate  agent  and  his 
duty  to  his  principal  cease  upon  the  delivery  of  the  title 
papers  and  payment  for  the  property. ' ' l  But  does  not 
the  broker's  duty  as  such  cease  when  he  has  obtained  a 
purchaser,  ready,  willing  and  able  to  buy  on  the  vendor 's 
terms,  or  has  brought  about  a  contract  of  sale?2 

§  82.    Termination  of  Agency  at  Pleasure  of  Principal. 

As  a  general  rule,  a  mere  naked  authority  is,  while 
executory,  revocable  at  any  time  at  the  pleasure  of  the 
principal.3  A  mere  naked  authority  is  one  in  the  execu- 
tion of  which  the  agent  has  no  other  interest  than  that 
which  springs  from  his  employment  as  agent  and  his 
right  to  earn  his  compensation.4 

Where  no  time  is  fixed,  either  the  broker  or  the  prin- 
cipal is  at  liberty  to  terminate  the  relation  at  will,  acting 
in  good  faith.5  In  Raleigh  E.  E.  &  Trust  Co.  v.  Adams, 
145  N.  C.  164  (1907),  the  court  said:  "  The  defendants, 
having  specified  no  definite  time  for  the  duration  of  the 
plaintiff's  employment  as  their  broker  when  they  ap- 
pointed and  authorized  it  to  sell  the  lots,  had  the  right 
to  terminate  it  at  will,  before  any  contract  was  effected 
with  a  purchaser,  subject,  however,  only  to  the  ordinary 
requirement  of  good  faith. ' ' 6 

"  Where  the  owner  of  property  employs  a  broker  to 
bring  him  an  offer  for  the  purchase  of  it,  without  naming 

1  Board    of  Trnstees   v.    Blair.   45   W.    Va.    820    (1899). 

*See  Dickinson  v.  Updike.   49  Atl.   713   (N.  J.   1901).     And  see  §§   117-119  infra. 
•Terwilllger   v.    Ontario  Co..    149   N.    Y.    92    (1896>;    and   see   Miller   v.    Wehrman, 
115   N.   W.    1078    (Nebr.    1908)  ;    Glover  v.    Henderson.    120   Mo.    376    (1893). 

*  Terwllliger   v.    Ontario   Co..    supra;  Glover  v.   Henderson,   supra. 
B  Geery  v.   Pollock,  16  App.  Dlv.  321    (N.  Y.   1897). 

•  Citing  Abbott  v.   Hunt.    129   N.   C.   403 :   Sihbald  v.   Iron  Co.,   83  N.   Y.   378 :   Coffin 
v.    Landis,   46  Pa.    St.   426;   Young  v.   Trainor.    158   111.   428;   Bailey   v.    Smith,    103   Ala. 
641;    Hartley's  Appeal,    53   Pa.    St.    212;    Hunt   v.    Rousmanier.    8   Wheat.    174;    Ins.    Co. 
v.   Williams,   91   N.   C.   69;   Brookshire  v.    Voncannan,    28   N.   C.    186;   Wllcos   v.    Ewing, 
141   U.   S.   627. 


REVOCATION    OF    BROKER'S    AUTHORITY.  81 

a  price  at  which  he  is  willing  to  sell,— that  is  to  say, 
where  the  owner  of  property  employs  a  broker  to  bring 
him  an  offer  which  he  is  to  pass  upon  after  it  is  brought 
to  him,— there  can  be  no  implied  agreement  or  under- 
standing that  the  broker  is  to  be  entitled  to  a  reasonable 
time  in  which  to  procure  such  an  offer;  in  such  a  case 
the  owner  has  a  right  to  reject  every  offer  brought  to 
him,  as  was  held  in  Walker  v.  Tirrell,  101  Mass.  257;  and 
it  is  plain  that  under  those  circumstances  he  could  decide 
not  to  accept  any  offer  and  to  dismiss  the  broker  alto- 
gether. ' ' 7 

§  83.  Termination  by  Principal  after  Lapse  of  Reason- 
able Time. 

Where  no  time  is  fixed  within  which  the  broker  must 
procure  a  purchaser,  the  principal  may,  after  the  lapse  of 
a  reasonable  time,8  terminate  the  broker's  authority 
and  relieve  himself  from  liability,  unless  such  action  is 
taken  in  bad  faith  for  the  purpose  of  depriving  the 
broker  of  the  fruits  of  his  labor  at  the  time  such  labor 
was  about  to  prove  effectual.9  But  if  the  broker  fails 
after  a  reasonable  time  to  procure  a  purchaser  and  the 
agency  is  terminated  in  good  faith,  it  matters  not  that 
what  the  broker  has  done  proves  of  use  and  benefit  to 
the  principal.10  And  where  the  property  remains  in  the 
broker's  hands  for  a  long  time  unsold,  the  owner  has  a 
right  to  terminate  the  broker's  employment.11 

In  Milne  v.  Kleb,  44  N.  J.Eq.  384  (1888),  the  court  sug- 
gested that  one  year  might  be  a  fair  limit  to  the  agency 
where  no  time  is  fixed.  We  do  not  say  it  was  so  decided, 

7  Cadlgan  v.  Crabtree,  179  Mass.  480  (1901);  s.  c.  on  further  appeal,  186  Mass. 
7  (100!  i. 

s  "Where  no  time  Is  expressed,  the  law  will  affix  the  limit  of  a  reasonable  time; 
but  it  will  not  extend  an  express  limit."  Emery  v.  Atlanta  Exch.,  88  Ga.  326  (1891). 

•  Donovan  v.  Weed,  182  N.  Y.  43  (1905);  Turner  v.  Snyder.  132  Mo.  App.  322 
(1908):  Moore  v.  Boehm,  45  Misc.  622  (N.  Y.  1904);  Kand  v.  Cronkrite,  64  111.  App. 
22-1  <iv.tr,  i. 

10  Donovan    v.    Weed,    supra.     See   also    §    101. 

"  Van   Siclen  v.   Herbst,   30  App.   Dlv.   265   (N.   Y.   1898). 


82  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

but  the  court  endeavors  to  compare  the  situation  with 
what  is  required  by  the  statute  of  frauds,12  and  uses  these 
words,  which  are  suggestive  if  nothing  more:  "  More- 
over, where  power  to  sell  land  is  given  by  parol  it  is 
usually  given  to  serve  a  temporary  purpose  with  an  ex- 
pectation on  the  part  of  the  donor  that  it  will  be  speedily 
exercised,  and  it  would,  therefore,  seem  entirely  reason- 
able that  the  rule  prescribed  by  the  statute  of  frauds  con- 
cerning parol  contracts  not  to  be  performed  within  a  year 
from  the  time  they  are  made,  should,  by  analogy,  be 
adopted  as  the  rule  limiting  the  duration  of  such  powers. 
Especially  should  this  be  so  where  it  appears  that  neither 
party  to  the  power  had,  for  more  than  a  year  after  it  was 
granted,  done  anything  which  would  indicate  to  the  other 
that  he  regarded  it  as  still  subsisting. ' ' 

The  most  that  this  case  can  be  authority  for  is  that 
the  reasonable  time  implied  by  law  should  not  be  longer 
than  a  year.  No  definite  time,  however,  can  be  laid  down 
as  constituting  a  reasonable  time  for  all  cases.  If  that 
were  so,  there  would  be  no  need  to  call  it  a  "  reasonable 
time,"  as  it  could  then  be  called  a  "  definite  time." 
What  would  be  a  reasonable  time  in  one  case  would  not 
be  in  another.  In  the  matter  of  the  sale  of  the  ordinary 
dwelling-house  for  which  there  is  more  or  less  call,  a 
few  months  might  be  said  to  be  a  reasonable  time  within 
which  the  broker  should  procure  a  customer.  On  the 
other  hand,  a  reasonable  time  in  which  to  sell  a  large 
office  building,  for  which  there  would  be  but  few  pur- 
chasers, should  certainly  be  longer  than  the  time  allowed 
for  a  sale  of  an  ordinary  dwelling.  The  subject  could  be 
further  discussed,  but  we  should  in  the  end  have  to  re- 
turn to  the  statement  thai;  what  is  a  reasonable  time 
depends  altogether  on  the  particular  situation  at  hand. 
Enough  has  been  said  to  illustrate  the  idea. 

» 

«  See  5§  24-26  supra. 


REVOCATION    OF   BROKER'S   AUTHORITY.  83 

§  84.    Limitations  on  Principal's  Power  to  Terminate 
Agency  at  Pleasure. 

Some  of  the  authorities  cited  in  the  preceding  sec- 
tions hold  that  the  broker's  authority  may  be  revoked  at 
any  time  by  the  principal,  acting  in  good  faith,  while 
others  hold  that  the  principal  may  do  so  after  the  lapse 
of  a  reasonable  time.  It  may  be  conceded  that  some  con- 
fusion exists.  The  cases  may  be  summarized,  however, 
and  the  following  may  be  said  to  be  a  fair  general  deduc- 
tion: Where  no  time  is  fixed,  and  the  broker  has  done 
nothing,  his  authority  may  be  terminated  at  any  time. 
Where  the  broker  has  actually  instituted  some  negotia- 
tion, the  principal  may  only  terminate  the  authority  in 
good  faith— that  is,  for  some  sufficient  reason,  or  after 
the  broker  has  had  a  reasonable  time  in  which  to  make 
his  efforts  produce  results.  Where  no  time  is  fixed,  and 
the  property  remains  in  the  broker's  hands  for  a  long 
time  and  he  then  enters  upon  negotiations,  the  principal 
may  assert  that  as  the  broker  has  done  nothing  during 
a  reasonable  time,  his  authority  has  expired  "  by  lapse 
of  time. ' ' 

It  is,  however,  generally  conceded  that  in  the  ordinary 
case  until  the  broker  has  actually  some  deal  under  way, 
the  principal  may  withdraw  the  property  from  him  and 
thus  terminate  the  agency.13  In  such  case  the  broker 
could  have  no  other  cause  for  complaint  than  that  he  was 
thus  prevented  from  possibly  making  a  sale,  which  is 
altogether  too  speculative.  It  may  be  that  where  the 
broker  has  incurred  expense,14  such  as  advertising  the 
property,  he  is  entitled  to  a  fair  and  reasonable  oppor- 
tunity to  perform  his  obligation,  subject  to  the  owner's 

M  See  Warren  v.  Holbrook,  118  N.  Y.  592  (1889),  where  It  was  said  that  at  any 
time  before  there  was  a  reasonable  assurance  that  the  contract  would  be  obtained  (In 
that  case  a  contract  to  do  roofing),  the  principal  might  have  terminated  the  agency. 

"See  Vincent  v.  Woodland  Oil  Co.,  165  Pa.  St.  402  (1894),  where  It  did  not  ap- 
pear that  services  were  to  be  on  a  contingency.  See  also  action  for  expenses,  etc.,  where 
agent's  authority  was  revoked  pending  his  efforts — Jaekel  v.  Caldwell,  156  Pa.  St.  266 
(1893).  See  also  McDonald  \.  Ortman,  98  Mich.  40  (1893). 


$4  POWERS,    AUTHORITY   AND   RIGHTS   OF   BROKER. 

right  to  sell  independently.15  But  it  may  be  doubted  if 
any  recovery  could  be  had  therefor,  since  it  is  now  cus- 
tomary for  brokers  to  advertise  property  at  their  own 
risk, — unless,  perhaps,  the  broker  could  show  that  his 
advertisement  brought  a  prospective  purchaser,  in  which 
case  he  would  no  doubt  have  to  bring  himself  under  the 
general  rule  and  show  that  the  owner  terminated  the 
agency  in  bad  faith. 

If  the  agency  is  for  a  definite  time  it  cannot  be  ter- 
minated without  liability  to  the  agent,  unless  for  the 
agent's  default  or  by  virtue  of  some  agreement  to  that 
effect.16  Where  the  broker  was  to  have  a  definite  time 
to  sell  the  property  and  expended  money  in  an  effort  to 
do  so  and  the  agency  is  revoked  before  the  expiration  of 
the  time  limit,  the  broker  is  entitled  to  compensation.17 
If  a  time  is  fixed  giving  exclusive  right  to  sell  and  the 
broker  in  good  faith  undertakes  performance  on  his  part, 
the  principal  cannot  revoke  the  authority  without  com- 
pensating the  broker.18  And  it  has  been  said  that  the 
principal  could  not  himself  sell  during  the  time.19  But 
see  the  subject  of  exclusive  agency  on  this  point.20 

§  85.    Revocation  of  Agency  by  Principal  Must  Be  in 
Good  Faith. 

A  leading  case 21  speaks  generally  of  the  right  to  ter- 
minate the  contract  of  agency,  in  these  words :  *  *  Where 
no  time  for  the  continuance  of  the  contract  is  fixed  by 
its  terms,  either  party  is  at  liberty  to  terminate  it  at  will, 
subject  only  to  the  ordinary  requirements  of  good  faith. 
Usually  the  broker  is  entitled  to  a  fair  and  reasonable 
opportunity  to  perform  his  obligation,  subject,  of  course, 

"See  Glover  v.   Henderson,    120  Mo.   367   (1893). 

"Rand  v.  Cronkrite,   64   111.   App.    224    (1896). 

"Glover  v.    Henderson,    120  Mo.   377,   380    (1893). 

"Attlx  v.   Pelan,   5  Iowa  343   (1857). 

»Id. 

a>  §§  238,  239  infra. 

asibbald   v.    Bethlehem  Iron   Co.,   83    N.    Y.    384    (1880). 


REVOCATION    OF   BROKER'S   AUTHORITY.  85 

to  the  right  of  the  seller  to  sell  independently.  But  that 
having  been  granted  him,  the  right  of  the  principal  to 
terminate  his  authority  is  absolute  and  unrestricted,  ex- 
cept only  that  he  may  not  do  it  in  bad  faith,  and  as  a 
mere  device  to  escape  the  payment  of  the  broker's  com- 
missions. Thus,  if  in  the  midst  of  negotiations  insti- 
tuted by  the  broker,  and  which  were  plainly  and  evi- 
dently approaching  success,  the  seller  should  revoke  the 
authority  of  the  broker  with  the  view  of  concluding  the 
bargain  without  his  aid  and  avoiding  the  payment  of 
commissions  about  to  be  earned,  it  might  well  be  said 
that  the  due  performance  of  his  obligation  by  the  broker 
was  purposely  prevented  by  the  principal.  But  if  the 
latter  acts  in  good  faith,  not  seeking  to  escape  the  pay- 
ment of  commissions,  but  moved  fairly  by  a  view  of  his 
own  interest,  he  has  the  absolute  right  before  a  bargain  is 
made,  while  negotiations  remain  unsuccessful,  before 
commissions  are  earned,  to  revoke  the  broker 's  authority, 
and  the  latter  cannot  thereafter  claim  compensation  for 
a  sale  made  by  the  principal,  even  though  it  be  to  a  cus- 
tomer with  whom  the  broker  unsuccessfully  negotiated, 
and  even  though,  to  some  extent,  the  seller  might  justly 
be  said  to  have  availed  himself  of  the  fruits  of  the  bro- 
ker's labor."  22 

Again,  in  the  same  case,23  the  court  says:  "  If  after 
the  broker  has  been  allowed  a  reasonable  time  within 
which  to  produce  a  buyer  and  effect  a  sale  he  has  failed 
to  do  so,  and  the  seller  in  good  faith  and  fairly  has  ter- 
minated the  agency  and  sought  other  assistance  by  the 
aid  of  which  a  sale  is  consummated,  it  does  not  give  the 
original  broker  a  right  to  commissions  because  the  pur- 
chaser is  one  whom  he  introduced  and  the  final  sale  is  in 
some  degree  aided  or  helped  forward  by  his  previous 
unsuccessful  efforts. ' ' 

22  See  also  Cadipan  v.  Crabtree,  186  Mass.  13  (1904);  Newton  v.  Oonness.  106 
S.  W.  894  (Tex.  1908). 

.2»Sibbald  T.    Bethlehem   Iron   Co.,    83   N.   Y.   390,    391    (1880). 


86  POWERS,   AUTHORITY  AND  BIGHTS  OF   BROKER. 

§  86.    Revocation  Must  Be  Timely. 

The  termination  of  the  agency  must  be  timely.  Where 
the  broker  has  in  fact  procured  a  purchaser  on  his  prin- 
cipal's terms,  it  is  too  late  to  revoke  the  broker's  au- 
thority.24 Likewise,  where  a  written  authorization  pro- 
vided that  it  should  remain  in  force  until  nullified  by 
the  principal  in  writing,  a  nullification  after  the  broker 
has  performed  his  obligation  is  too  late.25  An  express 
termination  of  the  employment  of  the  broker  is  matter 
of  defense.26  In  other  words,  the  broker  need  not  show 
as  part  of  his  affirmative  case  that  the  agency  was  still 
in  force,  but  the  principal  must  show  the  contrary,  if  he 
relies  upon  a  revocation  of  the  agency. 

§  87.    Termination  of  Agency  by  Previous  Sale. 

A  previous  sale  revokes  the  agent's  authority,27  and 
no  notice  to  the  broker  of  the  sale  is  necessary.28  A 
broker  must  produce  his  customer  while  the  premises  are 
in  the  market;  the  owner  does  not  contract  to  hold  them 
for  the  customer  to  be  produced  by  the  broker,  but,  act- 
ing in  good  faith,  he  may  sell  the  premises  at  any  time 
and  to  any  customer  who  is  willing  to  buy  upon  his  terms, 
and  commissions  cannot  be  collected  for  customers  pro- 
duced after  the  premises  have  been  sold.29 

And  a  real  estate  broker  is  not  entitled  to  commissions 
if  his  principal  has  already  in  good  faith  sold  the  prop- 
erty to  the  same  customer  through  another  broker.30 

But  the  giving  of  an  option  to  another  person  is  not 
a  previous  safe.31 

"Peach  R.  Co.  T.  Montgomery.  115  S.  W.  87  (Tex.  1908). 

*  Fine*  T.  Scbmitt,  48  Misc.  503  (N.  T.  1905).     See  also  preceding  sections. 

"Moore  Y.   Boetun.  45  Misc.   822   (N.  T.   1904). 

"  Gelding  ».  Haskin.  141  N.  Y.  520  (1894) ;  Weisels  *.  Wainwrigfit.  127  Mo. 
App-  514  (1907) ;  Wallace  T.  Figone,  1O7  Mo.  App.  366.  367  (1904).  (citing  Ahem  T. 
Baker.  34  Minn.  98;  Walker  T.  Denlaon.  86  111.  142;  Bissell  T.  Terry.  69  m.  184; 
Dolan  T.  Scantoo.  57  Cal.  261;  Tiffany  on  Agency,  pp.  134.  135;  Meekem  on  Agency. 
S  969;  Parsons  on  Contracts.  71;  Beinhard  on  Agency.  $  160). 

58  Wallace  T.   Figone.  **pro. 

>•  Rtttngboff  T.   Horowitz.    115  App.  INT.   571    (S.   T.   1906). 

»  Hodge  T.  Appelles.  122  App.  DiT.  437  (N.  T.  1907). 

»  Wallace  v.  Figone.  mpr*. 


REVOCATION    OF   BROKER'S   AUTHORITY.  87 

§  88.    Good  Faith  Necessary  to  Termination  of  Agency 
by  Previous  Sale. 

On  an  issue  as  to  the  good  faith  of  the  owner  in  ter- 
minating the  plaintiff's  employment  and  selling  the 
property  through  other  brokers  to  the  same  person,  the 
owner  may  show  that  he  paid  a  commission  to  the  broker 
through  whom  the  sale  was  finally  effected,  and  this  is 
relevant,  as  it  tends  to  show  that  the  owner  did  not  ter- 
minate plaintiff's  agency  for  the  purpose  of  avoiding 
payment  of  commissions.32 

Where  the  broker  produces  a  customer  ready,  willing 
and  able  to  buy  and  apparently  acceptable  to  the  vendor, 
he  has,  under  the  general  rule,33  earned  his  commission, 
although  after  a  delay  was  had  for  proper  reasons  the 
vendor  informs  the  broker  that  the  property  is  sold.84 

§  89.    Termination  by  Destruction  of  Subject-Matter. 

"  If  the  subject-matter  of  the  agency  is  extinguished 
or  ceases  to  exist,  this  will  revoke  the  agency.  It  has 
been  held,  for  instance,  that  where  two  persons  jointly 
appoint  an  agent  to  take  charge  of  some  matter  in  which 
they  are  jointly  interested,  as  to  sell  real  estate  owned 
by  them  jointly,  a  severance  of  the  joint  interest  revokes 
the  agency. ' ' 35 

§  90.    Termination  by  Bankruptcy. 

Bankruptcy,  either  of  principal  or  broker,  operates 
as  a  revocation  of  the  agent's  authority.36  As  a  prac- 
tical proposition  it  may  be  suggested  that  if  the  broker 
went  into  bankruptcy  before  bringing  about  a  sale 
nothing  would  be  due  him  and  no  question  would  arise. 
If  he  went  into  bankruptcy  after  effecting  a  sale  and  be- 

»-' S«-\vell    v.    Colllson,    123   App.    Dlv.    58C    (N.   Y.    1908). 

-i:l  S«v  §§    117-119  infra. 

••"  I'arvln    v.    AlK>ls-Gold   Realty  Co.,    126  App.   Dhr.   329   (N.   Y.    1908). 

86  Clark  on  Contracts.  750,   (citing  Rowe  v.  Rand,   111  Ind.  200  ;  12  N.  E.  Rep.  377). 

*•  Davis  v.  Lane,  10  N.  H.  158.     See  also  Clark  on  Contracts,  750. 


88  POWERS,    AUTHORITY    AND    RIGHTS    OF    BROKER. 

fore  collecting  his  commissions,  the  trustee  in  bank- 
ruptcy would  succeed  to  the  money.  If  the  principal 
goes  into  bankruptcy  before  the  broker  completes  a  sale, 
the  agency  is  no  doubt  terminated,  for  bankruptcy  in 
effect  brings  about  the  destruction  of  the  subject-matter, 
the  bankrupt's  title  passing  to  the  trustee  in  bankruptcy. 
If  the  principal  becomes  a  bankrupt  after  the  consumma- 
tion of  the  sale  and  before  payment  of  commissions,  the 
broker  stands  as  does  any  other  creditor.37 

§  91.    Termination  by  Insanity. 

We  are  not  now  dealing  with  the  legal  status  of  a 
contract  made  by  a  person  of  unsound  mind.  We  are 
assuming  that  two  competent  persons  have  entered  into 
an  agency  and  that  thereafter  one  becomes  mentally  in- 
competent. "It  is  said  by  Chancellor  Kent  that  the 
authority  of  an  agent  may  be  revoked  by  the  lunacy  of  a 
principal,  but  the  better  opinion  would  seem  to  be  that 
the  fact  of  the  existence  of  the  lunacy  must  have  been 
previously  established  by  inquisition  before  it  could  con- 
trol the  operation  of  the  power. ' ' 38 

In  the  case  from  which  the  foregoing  is  taken,39  the 
court  discusses  the  subject  further,  stating  that  the  ques- 
tion was  presented  to  the  highest  court  of  New  Hamp- 
shire in  the  case  of  Davis  v.  Lane,  10  N.  H.  156,  and  quot- 
ing from  that  case  as  follows : 

"  We  are  of  opinion,  however,  that  the  authority  of 
the  agent,  where  the  agency  is  revocable,  must  cease  or 
be  suspended  by  an  act  of  Providence  depriving  the  con- 
stituent of  all  mind  and  ability  to  act  for  himself,  and 
that  this  doctrine  can  be  sustained  by  very  satisfactory 
principles.  An  authority  to  do  an  act  for  and  in  the 
name  of  another  presupposed  a  power  in  the  individual 

"See   Collier   on   Bankruptcy    (7th   Ed.),    740. 

w  Merritt  v.   Merritt,    27   App.   Dlv.   208    (N.   Y.    1898). 

» Merritt  T.   Merritt,  27  App.   Diy.   208    (N.  Y.  1898). 


REVOCATION    OF   BROKER  *S   AUTHORITY.  89 

to  do  the  act  for  himself,  if  present.  The  act  to  be  done 
is  not  the  act  of  the  agent,  but  the  act  of  the  principal; 
and  the  agent  can  do  no  act  in  the  name  of  the  principal 
which  the  principal  might  not  himself  do  if  he  were  per- 
sonally present.  The  principal  is  present  by  his  repre- 
sentative, and  the  making  or  execution  of  the  contract 
or  acknowledgment  of  a  deed  is  his  act  or  acknowledg- 
ment. But  it  would  be  preposterous,  where  the  power 
is  in  its  nature  revocable,  to  hold  that  the  principal  was, 
in  contemplation  of  law,  present,  making  a  contract  or 
acknowledging  a  deed,  when  he  was  in  fact  lying  insensi- 
ble upon  his  death-bed,  and  this  fact  well  known  to  those 
who  undertook  to  act  with  and  for  him.  The  act  done 
by  the  agent,  under  a  revocable  power,  implies  the  exist- 
ence of  volition  on  the  part  of  the  principal.  He  makes 
the  contract.  He  does  the  act.  It  is  done  through  the 
more  active  instrumentality  of  another,  but  the  latter  rep- 
resents his  person  and  uses  his  name.  Further:  Upon 
the  constitution  of  an  agent  or  attorney  to  act  for  an- 
other, where  the  authority  is  not  coupled  with  an  inter- 
est, and  not  irrevocable,  there  exists  at  all  times  a  right 
of  supervision  in  the  principal,  and  power  to  terminate 
the  authority  of  the  agent  at  the  pleasure  of  the  prin- 
cipal. The  law  secures  to  the  principal  the  right  of  judg- 
ing how  long  he  will  be  represented  by  the  agent  and 
suffer  him  to  act  in  his  name.  So  long  as,  having  the 
power,  he  does  not  exercise  the  will  to  revoke,  the  au- 
thority continues.  When,  then,  an  act  of  Providence  de- 
prives the  principal  of  the  power  to  exercise  any  judg- 
ment or  will  on  the  subject,  the  authority  of  the  agent 
to  act  should  thereby  be  suspended  for  the  time  being; 
otherwise,  the  right  of  the  agent  would  be  continued  be- 
yond the  period  when  all  evidence  that  the  principal 
chose  to  continue  the  authority  had  ceased,  for,  after  the 
principal  was  deprived  of  the  power  to  exercise  any  will 
upon  the  subject,  there  could  be  no  assent  or  acquies- 


90  POWERS,   AUTHORITY   AND   RIGHTS   OF   BROKER. 

cence,  or  evidence  of  any  kind  to  show  that  he  consented 
that  the  agency  should  continue  to  exist.  And,  more- 
over, a  confirmed  insanity  would  render  wholly  irrevo- 
cable an  authority  which,  by  the  original  nature  of  its 
constitution,  it  was  to  be  in  the  power  of  the  principal 
at  any  time  to  revoke.  It  is  for  these  reasons  that  we  are 
of  opinion  that  the  insanity  of  the  principal,  or  his  in- 
capacity to  exercise  any  volition  upon  the  subject  by 
reason  of  an  entire  loss  of  mental  power,  operates  as  a 
revocation,  or  suspension  for  the  time  being,  of  the 
authority  of  an  agent  acting  under  a  revocable  power." 
The  rule  thus  laid  down  is  adopted  by  Judge  Story.40 

§  92.    Termination  by  Death. 

Agency  is  terminated  by  the  death  of  the  principal.41 
And  the  death  of  the  agent,  of  course,  terminates  his 
agency.  No  notice  of  the  death  of  the  principal  is  neces- 
sary to  relieve  his  estate  of  responsibility.42 

"  The  question  is  not  new,  and  it  has  been  uniformly 
answered  by  our  decisions  to  the  effect  that  the  death 
of  the  principal  puts  an  end  to  the  agency,  and,  there- 
fore, is  an  instantaneous  and  unqualified  revocation  of 
the  authority  of  the  agent.  2  Kent's  Com.  646;  Hunt  v. 
Rousmanier,  8  Wheat.  174.  There  can  be  no  agent  where 
there  is  no  principal.  There  are,  no  doubt,  exceptions 
to  the  rule,  as  where  the  agency  is  coupled  with  an 
interest  (Knapp  v.  Alvord,  10  Paige,  205;  40  Am.  Dec. 
241;  Hunt  v.  Eousmanier,  supra;  Hess  v.  Rau,  95  N.  Y. 
359),  or  where  the  principal  was  a  firm  and  only  one  of 
its  members  died.  Bank  v.  Vanderhorst,  32  N.  Y.  553. 
But  both  cases  recognize  the  general  rule  to  be  as  above 
stated.  In  Davis  v.  Windsor  Savings  Bank,  46  Vt.  728, 

*°  Story  on  Agency,  §  481.  See  also  Matthiesen  &  W.  Refining  Co.  v.  MacMahon, 
38  N.  J.  Law  536.  (The  Merrltt  case  is  aeain  reported  on  a  subsequent  trial,  in  32 
Misc.  (N.  Y.)  21;  aff'd,  without  opinion.  62  Anp.  Div.  (N.  Y.)  617.) 

«  Farmers'  L.  &  T.  Co.  v.  Wilson,   139  N.  Y.  284   (1893). 

**  George  on  Partnership,  258,  and  cases  there  cited;  Weber  v.  Bridgman,  113 
N.  Y.  600  (1889). 


REVOCATION    OF   BROKER'S   AUTHORITY.  91 

the  rule  was  applied.  The  defendant  paid  money  to  the 
agent  after  the  death  of  his  principal,  but  in  ignorance 
of  it,  and  the  administrator  of  the  deceased  recovered. 

"It  is  quite  unnecessary  to  go  through  the  cases  on 
this  subject.  The  rule  at  common  law  which  determines 
the  authority  of  an  agent  by  the  death  of  his  principal 
is  well  settled,  and  no  notice  is  necessary  to  relieve  the 
estate  of  the  principal  of  responsibility,  even  on  con- 
tracts into  which  the  agent  had  entered  with  third  per- 
sons who  were  ignorant  of  his  death.  Those  who  deal 
with  an  agent  are  held  to  assume  the  risk  that  his  au- 
thority may  be  terminated  by  death  without  notice  to 
them.  This  rule  was  established  in  England  (Leake 
Cont.  487),  although  now  modified  by  statute,  and  is  gen- 
erally applied  in  this  country.43  In  some  States  altera- 
tions have  been  made  by  statute;  and,  following  the  civil 
law,  it  was  held  in  Pennsylvania,44  that  the  acts  of  an 
agent  or  attorney,  done  after  the  death  of  his  principal, 
of  which  he  was  ignorant,  are  binding  upon  the  parties. 
This  was,  however,  in  opposition  to  the  current  of  au- 
thority. 1  Bars.  Cont.,  71 ;  2  Kent 's  Com.  646. ' ' 45 

§  93.    Fraud  of  Agent  as  Revocation. 

As  will  be  seen,46  one  of  the  requisites  entitling  a 
broker  to  commission  is  ' l  good  faith. ' '  Where  the  broker 
commits  a  fraud  on  his  principal  he  has,  of  course,  failed 
to  observe  good  faith  and  cannot  claim  his  commis- 
sion. "  When  an  agent  abandons  the  object  of  his 
agency  and  acts  for  himself  by  committing  a  fraud  for 
his  own  exclusive  benefit,  he  ceases  to  act  within  the 
scope  of  his  employment  and  to  that  extent  ceases  to  act 
as  agent."  47 

"Citing  Story  on  Agency,  §  488;  Pars.  Cont.,  Vol.  1.  p.  71 ;  2  Kent's  Com.  (12th 
Ed.).  tUfi.  f,4ti. 

44  Cassiday  v.   MeKenzie.   4  Watts  &   Serg.   282 ;  39  Am.   Dec.   76. 

45  \Vel>er  v.    Bridpman.    113   X.    Y.   600    (1889). 
*•  §  60  supra  et  seq.  and  Ch.  XIII  infra. 

17  Henry  v.  Allen,  151  N.  Y.  1   (1896);  36  L.  R.  A.  658,    (citing  Shipman  v.  Bank 


92  POWERS,    AUTHORITY   AND   RIGHTS    OF   BROKER. 

§  94.    Revocation  as  to  Third  Parties. 

When  one  has  constituted  or  accredited  another  his 
agent,  the  authority  of  the  agent  continues,  even  after 
an  actual  revocation,  until  notice  of  the  revocation  has 
been  given.48  Notice  of  revocation  of  the  agency  is  gov- 
erned by  the  same  rules  as  notice  of  the  dissolution  of  a 
partnership.49 


of  New  York,  126  N.  T.  318 ;  12  L.  R.  A.  791 ;  Welsh  v.  G.  A.  Bank,  73  N.  Y.  424, 
29  Am.  Rep.  175;  Allen  v.  So.  Boston  R.  Co.,  150  Mass.  200;  5  L.  R.  A.  716).  See 
also  Benedict  v.  Arnoux,  154  N.  Y.  715  (1897)  ;  Bienenstock  v.  Ammidown,  155  N.  Y. 
47  (1898).  See  also  §§  59-71  supra. 

«Claflln  v.'Lenhelm,  66  N.  Y.  305  (1876);  Bielenberg  v.  Montana  U.  R.  Co.,  2 
L.  R.  A.  813  (1888). 

t»  ciaflin   v.   Lenbeim,   supra.     But  see  §   92   supra. 


PART    II.— COMMISSIONS    AND    THEIR 
RECOVERY. 


CHAPTER   IX. 
GENERAL   RULES   AS   TO   COMMISSIONS. 

§  95.    General  Statement. 

A  broker's  commissions  are  earned  when,  having  been 
employed,  he  has  been  the  procuring  cause  of  the  sale. 
(§96.) 

When  several  brokers  are  employed  on  the  same  prop- 
erty, the  broker  who  in  good  faith  and  without  collusion 
consummates  the  sale  is  entitled  to  the  commission. 
(§§97,98.) 

An  exclusive  agent  is  entitled  to  his  commission  when 
he  produces  a  party  ready  to  purchase  at  a  satisfactory 
price.  (§99.) 

The  owner  may  always,  in  good  faith,  sell  independent 
of  the  broker  unless  he  has  agreed  not  to  do  so.  (§  100.) 

If  a  broker  abandons  his  negotiations,  the  employer 
may  subsequently  sell  to  the  same  person  without  liabil- 
ity to  the  broker  for  commissions.  (§  101.) 

Under  the  rule  which  prevails  in  most  jurisdictions, 
to  recover  commissions,  the  duly  employed  broker  must 
show  that  he  either  procured  a  contract  of  sale,  or  that 
he  produced  an  available  purchaser  who  was  ready,  will- 
ing and  able  to  purchase  on  his  employer's  terms. 
(§102.) 

93 


94  COMMISSIONS  AND   THEIR   RECOVERY. 

§  96.    When  Commissions  are  Earned. 

As  stated  more  fully  hereafter,1  the  rule  which  pre- 
vails in  most  jurisdictions  is  that  a  duly  employed  broker 
is  the  ''procuring  cause"  and  entitled  to  commissions 
either  when  he  secures  a  contract  of  sale  or  produces  a 
purchaser  ready,  willing  and  able  to  purchase  on  his  prin- 
cipal's  terms. 

A  typical  case  is  that  of  Kiernan  v.  Bloom,  91  App. 
Div.  429  (N.  Y.  1904). 2  Here  it  was  agreed  that  the 
broker  should  advertise  the  owner's  place  in  the  broker's 
name;  that  the  inquiries  should  be  attended  to  by  the 
broker  and  that  the  owner  would  pay  a  commission  if  a 
sale  resulted.  A  purchaser  had  his  attention  drawn  to 
the  advertisement  and  wrote  the  broker  asking  for  de- 
tails. The  broker  arranged  a  meeting  between  his  rep- 
resentative and  the  purchaser,  and  within  a  day  or  two 
after  this  interview,  in  which  the  broker's  representative 
described  the  property  and  advised  the  purchaser  to  buy, 
the  purchaser  opened  negotiations  personally  with  the 
owner,  which  resulted  in  his  purchasing  the  property. 
The  matter  of  the  purchase  and  the  sale  had  not  been 
discussed  before  between  the  owner  and  the  purchaser 
and  no  other  agency  at  any  time  intervened  to  induce 
the  purchaser  to  open  negotiations.  The  purchaser  did 
not  disclose  to  the  broker  or  his  representative  that  he 
had  previously  seen  the  property  nor  did  he  mention  the 
broker  or  his  representative  to  the  owner.  The  broker 
did  not  introduce  the  purchaser  to  the  owner,  and  he  was 
not  present  when  the  sale  was  consummated. 

In  passing  upon  this  case  the  court  said:  "  The  sale 
was  effected  through  the  plaintiff's  (broker's)  agency 
as  the  procuring  cause ;  his  communications  with  the  pur- 
chaser were  the  cause  and  means  of  bringing  him  and  the 
defendant  (owner)  together,  and  a  sale  resulted  in  con- 

1  See  §  117  infra. 

*  See  also  Branch  v.   Moore,   105   S.  W.   1178    (Ark.    1907). 


GENERAL   RULES   AS   TO   COMMISSIONS.  95 

sequence  of  his  efforts.  He  is,  therefore,  entitled  to  his 
commissions.  It  is  of  no  consequence  that  the  plaintiff 
did  not  negotiate  the  sale  in  person,  and  was  not  present 
at  the  sale;  nor  that  the  purchaser  was  not  made  known 
to  the  defendant  as  the  plaintiff's  customer,  for  he  was 
so  in  fact.  The  plaintiff's  right  to  commissions  is  in  no 
way  affected  by  proof  that  the  defendant  himself  nego- 
tiated the  sale,  nor  by  the  fact  that  the  purchaser  was 
not  introduced  to  the  owner  by  the  plaintiff.  In  full  com- 
pliance with  his  agreement  he  procured  a  purchaser,  who 
took  the  property  on  the  owner's  terms.  His  commis- 
sions were,  therefore,  earned." 

It  is  not  essential,  to  entitle  a  broker  to  commissions, 
that  he  should  have  procured  a  purchaser  upon  the  pre- 
cise terms  first  named  by  the  principal  at  the  time  of 
employment;  for  if,  through  the  instrumentality  of  the 
broker,  the  buyer  and  seller  meet,  and  negotiations  are 
thus  opened  up  between  them,  which,  continuing  with- 
out withdrawal  of  either  party  therefrom,  culminate  in  a 
sale,  though  for  a  less  sum  than  originally  named,  the 
broker  is  entitled  to  his  commissions.3 

And  in  Southwick  v.  Swavienski,  114  App.  Div.  681 
(N.  Y.  1906),  it  was  held  that  where  a  broker  duly  em- 
ployed, is  the  cause  of  bringing  the  purchaser  and  owner 
together,  he  is  entitled  to  his  commissions  although  the 
sale  is  consummated  subsequently  by  the  owner  himself 
on  different  terms.4 

§  97.    Respective  Rights  of  Brokers  when  Several  are 
Employed. 

The  owner  may  employ  as  many  brokers  as  he 
pleases,5  and  he  is  liable  for  commissions  only  to  the  one 
who  effects  the  sale. 

•Hobbs  v.   Edgar,   23   Misc.   618    (N.   T.    1898). 

*See  also  Branch  v.   Moore,    105  S.   W.   1178    (Ark.   1907). 

«See   §   237   infra. 


96  COMMISSIONS   AND   THEIR   RECOVERY. 

Where  there  are  two  brokers,  the  one  who  first  calls 
the  customer's  attention  to  the  property  is  not  neces- 
sarily entitled  to  the  commissions.  If  the  other  broker 
in  good  faith  and  without  collusion  consummates  the  sale, 
he  is  entitled  to  the  commission.6  "  Unless  he  specially 
agrees  not  to  do  so,  an  owner  may  employ  two  or  more 
brokers.  In  such  case  it  is  the  broker  who  is  the  effi- 
cient cause  of  the  sale  who  is  entitled  to  commissions, 
and  this  right  is  not  affected  by  the  fact  that  such  broker 
sells  to  one  whose  attention  to  the  property  had  before 
been  called  by  another  broker.  It  is  not  the  broker  who 
first  speaks  of  the  property,  but  he  who  is  the  procuring 
cause  of  the  sale,  be  he  the  first  or  second  to  engage  the 
attention  of  the  purchaser.7  The  party  selling,  where 
several  brokers  have  been  employed,  may  in  the  absence 
of  all  collusion  on  his  part,  pay  to  the  agent  through 
whose  instrumentality  the  sale  was  brought  about,  with- 
out inquiry  as  to  whether  some  other  broker  may  not 
have  had  something  to  do  with  effecting  the  sale. ' ' 8 

"  Whatever  may  be  the  rights  of  a  real  estate  broker 
who  takes  a  customer  away  from  another  broker  and 
closes  a  sale  between  such  customer  and  the  owner,  if 
done  without  the  aid  or  connivance  of  the  owner,  yet  if 
the  owner,  with  knowledge  of  the  facts,  deals  with  the 
customer  of  the  first  broker,  even  through  another  agent, 
he  will  be  liable  to  the  first  broker."9  Where  two 
brokers  are  apparently  working  on  the  same  purchaser, 
the  one  who  first  brings  the  purchaser  up  to  the  terms 
of  the  employer  is  entitled  to  the  commissions.10 

In  Jennings  v.  Trummer,  96  Pac.  874,  (Ore.  1908), 
the  court  quotes  from  Tinsley  v.  Scott,  69  HI.  App.  352, 

•Martin  v.  Billings.  2  N.  Y.  City  Ct.  Rep.  86  (1884);  McCloskey  v.  Thompson, 
26  Misc.  735  (N.  Y.  1899). 

» Citing  Mechem  on  Agency,  §  969 ;  Vreeland  Y.  Vetterlein,  33  N.  3.  L.  247 ;  Sib- 
bald  v.  The  Bethlehem  Iron  Co.,  83  N.  Y.  378. 

8  Patten  v.  Willis,  134  111.  App.  651.  652  (1907),  quoting  from  McGulre  v.  Carl- 
son, 61  111.  App.  295.  See  §§  338-346  infra. 

•Jennings  v.    Trummer,   96   Pac.    874    (Ore.    1908). 

*>  Freedman  v.  Havenmeyer,  37  App.  Div.  518  (N.  Y.  1899)  ;  Hennings  v.  Ptr- 
sons,  108  Va.  3  (1908). 


GENERAL  RULES   AS   TO   COMMISSIONS.  97 

355:  "  Of  several  independent  brokers  under  such  em- 
ployment at  the  same  time,  the  one  who  first  so  sells  is 
entitled  to  the  commission.  No  express  contract  to  that 
effect  is  required  to  give  him  that  right.  But,  to  be  a 
producer,  the  party  presented  must  be  a  client  or  a  cus- 
tomer of  his  own,  and  not  one  then  sustaining  that  rela- 
tion to  another  broker  under  like  employment.  If  he 
was  first  in  negotiation  with  such  other,  he  continues  to 
sustain  that  relation  to  him  until  it  is  expressly  broken 
off,  or  the  matter  of  the  purchase  has  ceased  to  be  held 
by  him  under  consideration.  The  employer,  with  notice 
of  the  pendency  of  such  negotiation,  cannot  escape  lia- 
bility to  the  broker  for  his  commission  by  selling  to  his 
customer  through  another,  even  though  he  first  dis- 
charges the  former  if  he  does  so  without  giving  him  a 
reasonable  time-  to  effect  the  sale."11  "  Where  two 
brokers  are  employed,  the  one  effects  the  sale  who  brings 
the  minds  of  the  parties  to  meet." 12 

§  98.    Rule  as  to  Commissions  when  Several  Brokers 
are  Employed. 

The  fact  that  a  person  is  the  first  broker  who  calls 
the  attention  of  the  purchaser  to  the  property,  in  itself, 
gives  no  claim  to  commissions.  The  right  to  commis- 
sions depends  upon  the  performance  of  the  broker's  obli- 
gation to  bring  the  buyer  and  seller  to  an  agreement.13 

Where  the  owner  does  not  know  that  the  purchaser 
produced  by  the  second  broker  is  the  same  purchaser 
which  the  first  broker  is  working  with,  the  owner*  is  not 
liable  to  the  first  broker  in  the  absence  of  bad  faith,  or 
of  such  facts  as  should  have  prompted  inquiry.14  Al- 
though the  parties  are  originally  brought  together  by 
the  broker,  but  no  terms  are  agreed  upon,  and  some 

11  Also  citing  Day  v.  Porter,   60  111.  App.   386,  389. 

12  Hobbs  v.   Edgar,   23  Misc.  618   (N.  Y.   1898). 
"  Haines  v.   Barney,   33  Misc.  748   (N.  T.   1900). 
"  Qulst  v.  Goodfellow,  99  Minn.  511   (1906). 


98  COMMISSIONS   AND    THEIR    RECOVERY. 

weeks  later  the  matter  is  taken  up  by  another  broker 
who  finally  consummates  the  sale  by  bringing  the  parties 
to  terms,  the  first  broker  is  not  entitled  to  commissions. 
To  earn  his  commission  the  broker  must  do  something 
more  than  get  authority  from  the  owner  to  negotiate  the 
sale.  He  must  be  the  effectual  cause  of  the  sale.  He 
must  find  the  purchaser,  or  at  the  very  least  induce  a 
purchaser  to  buy  the  property  at  a  price  acceptable  to 
the  owner.15  "  The  fact  that  a  sale  or  exchange  of  the 
property  is  finally  brought  about  by  the  efforts  of  the 
principal  or  another  broker  with  a  person  with  whom 
the  first  broker  had  previously  negotiated  without  suc- 
cess, will  not  furnish  a  legal  basis  for  a  claim  for  com- 
missions by  the  first  broker,  especially  when  it  appears 
that  the  first  broker  has  for  a  long  time  ceased  negotia- 
tions with  the  purchaser  and  abandoned  all  efforts  to 
induce  him  to  take  the  property  on  the  proposed 
terms." 16  While  the  statement  of  the  law  is  plain,  it  is 
a  matter  not  always  free  from  difficulty  to  determine 
which  broker's  efforts  were  the  inducing  cause  of  the 
sale.17 

In  Edwards  v.  Pike,  107  S.  W.  586  (Tex.  1908),  it  was 
said:  "  The  general  rule  is  that  a  real  estate  agent  hav- 
ing a  contract  authorizing  him  to  effect  a  sale  is  entitled 
to  the  commissions  agreed  upon  where  he  procures  a 
buyer  who  consummates  the  purchase  of  the  property  on 
terms  satisfactory  to  the  owner.  Ordinarily  the  appli- 
cation of  this  rule  to  the  facts  of  a  given  case  is  not  diffi- 
cult; for,  when  it  is  shown  that  the  agent  was  instrumen- 
tal in  bringing  the  buyer  and  seller  together,  the  fact  that 
the  agent  was  the  procuring  cause  of  the  sale  afterwards 
consummated  is  sufficiently  established.  But  when  each 
of  two  or  more  brokers  within  the  knowledge  of  the  other 

15  De  Zavala   v.    Rogaliner,    45   Misc.    430    (N.    Y.    1904). 

i«  Davis   v.    Cassette,    30    111.    App.    45    (1888),    (citing   Lipe   v.    Ludewick,    14    111. 
App.    372;    Sibbald   v.    Bethlehem   Iron   Works,    83    N.   Y.    378). 
"  See  also  §   173  infra. 


GENERAL  RULES   AS   TO   COMMISSIONS.  99 

has  a  contract  authorizing  him  to  effect  a  sale  of  the  same 
property,  the  fact  that  one  was  instrumental  in  bringing 
the  parties  together  fairly  cannot  be  made  the  test  of  the 
liability  of  the  owner  of  the  property  for  commissions 
claimed.  The  owner  has  a  right  to  authorize  more  than 
one  broker,  each  independently  of  the  other,  to  effect  a 
sale  of  his  property;  and,  so  long  as  he  remains  neutral, 
he  ought  to  be  permitted  without  incurring  liability  for 
commissions  to  more  than  one  of  them  to  consummate 
the  sale  of  the  property  through  the  one  who  first  pro- 
duces a  person  ready  to  buy  it,  whether  the  agent  pro- 
ducing the  purchaser  is  the  one  who  first  brought  him 
and  the  buyer  together  or  not.  The  practical  test  which 
ought  to  control  in  fixing  the  liability  of  the  property 
owner  on  the  facts  of  a  case  like  this  is:  Within  the 
knowledge  of  the  owner  at  the  time,  was  the  sale  con- 
summated on  terms  agreed  upon  between  the  buyer  and 
the  broker  who  brought  the  parties  together;  or  was  it 
consummated  on  other  terms  as  the  result  of  negotiations 
between  another  broker  and  the  buyer,  and  after  the  lat- 
ter had  abandoned  the  contract  made  by  him  with  the 
other  broker?  In  the  absence  of  special  circumstances 
which  would  make  it  proper  to  so  charge  him,  the  owner 
ought  not  to  be  held  liable  for  commissions  to  more  than 
one  broker,  and,  after  actually  selling  his  property  to 
a  purchaser  produced  by  one  broker  on  terms  negotiated 
by  such  broker  and  not  by  another,  he  ought  not  before 
paying  him  the  commissions  be  required  at 

his  peril  to  determine  whether  some  other  broker  was  not, 
in  fact,  the  procuring  cause  of  the  sale.18  In  such  a  case, 
the  risk  of  finally  effecting  by  his  agency,  on  terms 
agreed  upon  between  him  and  the  buyer,  a  sale  of  the 
property,  ought  to  be  borne  by  the  broker.  His  services 
towards  effecting  one  are  performed  with  a  knowledge 
on  his  part  that  another  broker  has  authority  similar  to 

18  See  Ch.   XXXV,   "  Interpleader,"   §  339,    as   to  conflicting  claims   for  commission. 


100  COMMISSIONS   AND   THEIE   EECOVERY. 

that  conferred  upon  him;  and,  if  before  a  sale  is  com- 
pleted the  buyer  quits  him  and  on  other  terms  consum- 
mates it  through  another  agent,  it  is  a  contingency  he 
should  be  held  to  have  contemplated  at  the  time  he  un- 
dertook the  service,  and  about  the  happening  of  which 
he  has  no  right  to  complain.19  The  broker  who  under- 
takes a  sale  of  property  with  full  knowledge  that  another 
broker  has  also  undertaken  to  sell  it  ought  not  to  expect 
more  of  the  owner  than  that  he  will  not  interfere  in  favor 
of  the  one  or  the  other.  It  is  then  an  even  contest  between 
them,  where  the  chances  of  success  in  contemplation  of  the 
competition  to  be  expected  should  be  presumed  to  have 
been  duly  weighed  by  each;  and,  if  as  a  result  of  such 
competition,  without  interference  or  fault  on  the  part  of 
the  owner,  the  sale  is  actually  consummated  by  his  com- 
petitor the  broker  who  brought  the  prospective  purchaser 
and  the  owner  together,  but  failed  to  consummate  a  sale 
upon  the  terms  agreed  upon  between  him  and  the  buyer, 
ought  not  to  be  permitted  to  charge  against  the  owner 
the  loss  sustained  by  him,  not  by  the  owner 's  fault  but  as 
a  result  of  acts  of  his  competitor  and  conduct  of  the 
purchaser  which  he  reasonably  should  have  contemplated 
might  ensue  when  he  undertook  and  performed  the  serv- 
ice. Such  a  case  is  not  at  all  like  the  one  where  the 
broker,  having  the  exclusive  right  to  sell,  or  ignorant 
of  the  fact  that  another  broker  has  a  right  equal  to  his 
own,  brings  the  purchaser  and  the  owner  together,  when 
the  sale  is  consummated  by  the  owner  himself  or  by  the 
direct  agency  of  another  broker.  There  the  broker 
bringing  the  parties  together  should  be  held  to  be  en- 
titled to  his  commissions  if  the  sale  is  consummated  by 
the  owner  himself,  because  he  is  entitled  to  same  by  the 
terms  of  his  contract ;  and  if  the  sale  is  consummated  by 
another  broker,  because  his  services  were  performed  on 

19  Citing  Vreeland  v.    Vetterlein,   33   N.   J.   L.   247 ;    Scott  v.   Lloyd,    19   Colo.    401 ; 
35  Pac.  733;  Farrar  v.  Brodt,  35  111.  App.  617;  McGuire  v.  Carlson,   61  111.  App.   295. 


GENERAL   RULES   AS   TO    COMMISSIONS.  101 

the  faith  of  his  contract  and  without  reference  to  risks 
of  failure  which  a  knowledge  that  he  had  a  competitor 
would  have  caused  him  to  weigh  and  perhaps  provide 
against. ' ' 


§  99.    Liability  of  Principal  for  Commissions  to  Exclu- 
sive Agent. 

A  broker,  employed  to  make  a  sale  under  an  agree- 
ment for  the  exclusion  of  all  other  agencies,  is  entitled 
to  his  commissions  when  he  produces  a  party  ready  to 
purchase  at  a  satisfactory  price,20  and  the  principal  can- 
not avoid  liability  for  such  commissions  by  negotiating 
a  sale  through  another  broker.21  And  where  a  broker 
is  given  the  exclusive  agency  to  sell  property,  as  for  in- 
stance a  large  plot  of  lots,  the  owner  is  liable  in  damages 
if  he  breaks  the  agreement.22 

§  100.    Liability  for  Commissions  when  Principal  Ne- 
gotiates Sale. 

"  A  party  having  employed  a  broker  to  sell  real  es- 
tate, may,  notwithstanding,  negotiate  a  sale  himself; 
and  if  he  does  so  without  any  agency  of  the  broker,  is 
not  liable  to  him  for  commissions.  To  earn  his  commis- 
sions the  broker  must  be  an  efficient  agent  in,  or  the  pro- 
curing cause  of  the  contract.23  His  commission  is  earned 
by  finding  a  sufficient  purchaser,  ready  and  willing  to 
enter  into  a  valid  contract  for  the  purchase  upon  the 
terms  fixed  by  the  owner,  and  having  introduced  such 
a  one  to  the  owner  as  a  purchaser,  is  not  deprived  of  his 

20  See   §§    117-119   infra  as   to  conflicting  views   concerning  when   broker  Is  the  pro- 
curing cause  of  a  sale.     As  to  exclusive  agency,  see  §  239  infra. 

21  Moses  v.   Blerling.  31  N.  Y.  462   (1865). 

22  Barthrick    v.    Coffin,    13   App.    DIv.    101    (N.    Y.    1897)  ;   Attlr    v.    Pelan,    5    Iowa 
344    (1857). 

23  The  owner   may    always    In    good   faith   sell    independent    of  the    broker   unless   he 
has  agreed  not  to  do  so'.     Burch  v.   Hester,   109  S.   W.  399    (Tex.   1908)  ;  Cook  v.   Forst, 
116  Ala.  396  (1896)  ;  Humphries  v.  Smith,  5  Ga.  App.  343  (1908).     See  also  §  238  infra. 


102  COMMISSIONS   AND   THEIR   RECOVEKY. 

right  to  commission  by  the  owner  negotiating  the  con- 
tract himself ." 24 

A  contract  employing  a  broker  to  sell  lands  and  giv- 
ing him  commissions  "  in  case  of  the  sale  or  conveyance 
of  said  property  at  any  time  within  one  year  from  this 
date,"  should  not  be  construed  to  mean  that  the  broker 
was  entitled  to  commissions  if  the  property  were  sold  by 
the  owner  without  the  aid  of  the  broker,  but,  on  the  con- 
trary, only  entitles  the  broker  to  commissions  if  he  was 
instrumental  in  bringing  the  owner  and  purchaser  to- 
gether.25 

§  101.    Rule  as  to  Commissions  when  Broker's  Efforts 
Fail. 

"  In  Wylie  v.  Bank,  61  N.  Y.  416,  it  is  held  that,  to 
entitle  a  broker  to  recover,  he  must  be  the  efficient  agent 
or  the  procuring  cause  of  the  sale.  The  means  employed 
by  him,  and  his  efforts,  must  result  in  the  sale.  He  must 
find  the  purchaser,  and  the  sale  must  proceed  from  his 
efforts,  acting  as  broker;  and  where  a  broker  opens  ne- 
gotiations, but,  failing  to  bring  the  customer  to  the  speci- 
fied terms,  abandons  them,  and  the  employer  subse- 
quently sells  to  the  same  person  at  the  price  fixed,  he 
is  not  liable  to  the  broker  for  commissions.26  Although 
in  Hay  v.  Platt,  66  Hun  488,  21  N.  Y.  Suppl.  362,  the 
principal  had  subsequently  dealt  directly  with  the  party 
brought  to  his  notice  by  the  broker,  and  sold  at  the  same 
price  he  had  been  willing  to  sell  for  originally,  the  broker 
was  not  allowed  to  recover.  This  upon  the  ground  that 
where  the  broker  fails  to  produce  a  customer  ready  and 
willing  to  enter  into  a  contract  upon  the  terms  of  his 

2«McClave  v.  Paine,  49  N.  Y.  561  (1872),  (citing  Lyon  v.  Mitchell,  36  N.  Y. 
235;  Barnard  v.  Monnot,  3  Keyes  (N.  Y.)  203;  Moses  v.  Sterling,  31  N.  Y.  462;  Red- 
field  v.  Tegg,  38  N.  Y.  212). 

*  Parkhnrst   v.    Tryon,    134   App.    Div.    843    (N.   Y,    1909). 

»  See  §§   241,   242  infra. 


GENERAL   RULES    AS   TO    COMMISSIONS.  103 

principal  and  abandons  further  efforts  the  principal 
violates  no  right  of  the  broker  in  negotiating  with  the 
proposed  purchaser  directly  and  independently.  In 
Douglass  v.  Halstead,  81  Hun  65,  30  N.  Y.  Suppl.  592,  a 
broker  had  been  negotiating  a  sale  and  was  compelled 
to  stop  before  reaching  a  consummation  by  the  circum- 
stance that  the  purchaser  at  the  time  wanted  another 
piece  of  property  in  addition  to  the  defendant's.  An- 
other broker  conceived  the  idea  of  a  partition  suit  to 
bring  about  a  sale  of  the  other  piece  required,  and  com- 
mission was  finally  paid  him  on  the  sale.  The  court  (at 
page  69,  81  Hun,  and  page  594,  30  N.  Y.  Suppl.)  said: 
'  While  it  is  unfortunate  for  the  plaintiff  that  he  should 
have  been  "  so  near  and  yet  so  far  "  from  the  accom- 
plishment of  his  purpose,  the  fact  remains  that  the  evi- 
dence justified  the  determination  of  the  referee  that  the 
plaintiff  did  not  at  any  time  find  a  purchaser,  and  pro- 
duce him  to  his  principal,  ready  and  willing  to  purchase 
the  real  estate  upon  its  terms  and  this  much 

was  necessary  for  him  to  do  in  order  to  recover. '  " 27 

But  "  if  the  efforts  of  the  broker  are  rendered  a  fail- 
ure by  the  fault  of  the  employer;  if  capriciously  he 
changes  his  mind  after  the  purchaser,  ready  and  willing, 
and  consenting  to  the  prescribed  terms,  is  produced;  or 
if  the  latter  declines  to  complete  the  contract  because  of 
some  defect  of  title  in  the  ownership  of  the  seller,  some 
unremoved  incumbrance,  some  defect  which  is  the  fault 
of  the  latter,  then  the  broker  does  not  lose  his  commis- 
sions. ' ' 28 

§  102.    On  What  Recovery  of  Commissions  Depends. 

In  order  to  recover  commissions,  the  broker  must: 
(1)  Show  that  he  was  employed;  (2)  be  the  procuring 

"  Markus  v.   Kenneall.v.    19  Misc.   517;  43  N.   Y.  Suppl.   1057,   1058   (1897). 
*8Slbbald   v.    Bethlehem   Iron   Qo.,   83   N.   Y.   383,   384    (1880). 


104  COMMISSIONS   AND   THEIR   RECOVERY. 

cause  of  the  sale;  (3)  bring  about  the  deal  on  the  terms  of 
his  employer;  (4)  act  in  good  faith;  (5)  produce  an 
available  purchaser,  which  under  the  general  rule  is  one 
ready  and  willing  to  purchase  and  also  legally  able  to 
do  so;  (6)  bring  about  a  completed  transaction. 


CHAPTER  X. 
BROKER  MUST  BE  EMPLOYED. 

§  103.    General  Statement. 

A  mere  volunteer  who  brings  a  customer  is  not  en- 
titled to  commissions.  (§§  104,  105.)  To  justify  a  re- 
covery of  commissions,  there  must  be  an  employment  of 
the  broker,  either  express  or  to  be  implied  from  the  cir- 
cumstances. (§§  106,  107.)  Where  the  broker  claims 
he  was  employed  by  the  owner's  agent,  he  must  show 
the  agent's  authority  to  employ  him.  (§  108.)  Where 
original  employment  is  wanting,  a  ratification  of  the 
broker's  acts  may,  under  some  circumstances,  be  equiva- 
lent to  an  original  retainer.  (§§  109-112.) 

§  104.    Volunteers  Not  Entitled  to  Commission. 

In  order  to  recover  commissions,  a  broker  must  prove 
an  employment  by  the  defendant  and  the  rendition  of 
services  at  the  defendant 's  request.1  It  occurs  frequently 
that  the  broker  is  not  retained  by  the  owner  of  property 
to  endeavor  to  sell  it  but  hears  through  other  sources 
that  the  owner  desires  to  sell.  The  broker  then  interests 
himself  in  the  matter  and  endeavors  to  find  a  purchaser, 
not  having,  however,  been  authorized  or  requested  by  the 
owner  to  do  so.  In  such  case,  the  broker  is  said  to  be  a 
"  volunteer."  The  owner  may,  in  such  case,  recognize 
the  efforts  of  the  broker  and  obligate  himself  to  pay 
commissions,  or  he  may  refuse  to  recognize  the  broker's 
efforts  altogether.2 

iRoome  v.   Robinson,  99  App.   Div.   143    (N.   Y.    1904). 
*  See  §§   109-112  infra. 

105 


106  COMMISSIONS   AND   THEIR   RECOVERY. 

' '  If  the  broker  renders  services  as  a  mere  volunteer, 
without  authority,  express  or  implied,  the  owner  of  the 
property  is  not  bound  to  pay  him  anything  for  such  serv- 
ices. " 3  ' '  If  a  broker,  without  a  previous  request, 
brings  a  customer  to  a  vendor,  and  the  latter,  without 
further  acceptance  of  the  broker's  services,  takes  the 
customer,  the  broker  is  not  entitled  to  compensation. 
An  owner  is  not  obliged  to  refuse  a  possible  customer 
because  services  which  he  has  not  requested  have  been 
obtruded  upon  him,  nor  can  he  be  enticed  into  a  liability 
for  commissions  without  his  knowledge.  In  order  to  en- 
title the  broker  to  commissions,  there  must  be  an  actual 
employment  or  ratification  and  acceptance  of  tlie  broker's 
acts;  but  in  such  case  the  intention  to  ratify  must  be 
plain,  and  no  ratification  could  be  inferred  where  no 
claim  was  made  by  the  broker,  and  the  fact  that  he  was 
acting  as  broker  was  not  drawn  to  the  attention  of  the 
seller  at  the  time. ' ' 4 


§  105.    When  Party  Acting  Is  a  Volunteer. 

Even  though  a  person  is  a  real  estate  broker,  he  may 
assume  such  relations  to  the  parties  as  would  entitle  the 
latter  to  the  benefit  of  any  services  rendered.  For  ex- 
ample, a  broker  may  agree  that  the  amount  of  his  com- 
mission may  be  deducted  from  the  purchase  price  and  al- 
lowed to  the  purchaser,  in  whom  he  is  interested.5  Or, 
again,  a  person  is  not  entitled  to  a  commission  from  the 
owner  for  informing  a  broker  that  certain  property  is 

•Pordtran  v.  Stowers,  113  S.  W.  631  (Tex.  1908),  (citing  Pipkin  v.  Home.  68 
8.  W.  (Tex.  Civ.  App.)  1000;  Ehrenworth  v.  Putnam,  55  S.  W.  (Tes.  Civ.  App.)  190 
Dunn  v.  Price,  87  Tex.  319 ;  28  S.  W.  681 ;  Cook  v.  Welch.  91  Mass.  350 ;  Hinds  v 
Henry,  36  N.  J.  L.  328;  McVickar  v.  Roche,  74  App.  Div.  397;  77  N.  Y.  Snppl.  501 
Viley  v.  Pettit,  96  Ky.  576 ;  29  S.  W.  438 ;  Walton  v.  Clark,  54  Minn.  341  ;  56  N.  W 
40;  Barton  v.  Powers,  182  Mass.  467;  65  N.  E.  826). 

*  Fowler  v.  Hoschke,  53  App.  Dlv.  327  (N.  Y.  1900)  ;  McVickar  v.  Roche,  74  App. 
Div.  397  (N.  Y.  1902)  ;  Hinds  v.  Henry,  36  N.  J.  L.  330  (1873)  ;  Ballentine  v.  Mercer, 
130  Mo.  App.  614  (1908),  (citing  Butts  v.  Rubey.  85  Mo.  App.  405;  Brady  v.  Machine 
Co.,  83  N.  Y.  Suppl.  663 ;  Haynes  v.  Fraser.  78  X.  Y.  Snppl.  794 ;  Downing  v.  Buck, 
98  N.  W.  388;  Barton  v.  Powers,  65  N.  E.  826;  Viley  v.  Pettit,  29  S.  W.  438). 

s  Redhead   v.   Parkway  Club,    148   N.    Y.   471    (1895). 


BROKER    MUST  BE   EMPLOYED.  107 

in  the  market,  a  purchaser  for  which  is  afterward  pro- 
cured by  the  broker.6 

Likewise,  one  not  engaged  in  the  real  estate  business, 
who  learned  from  the  husband  of  a  landowner  that  his 
wife  wished  to  sell  and  was  told  by  the  husband  to  get  a 
customer,  is  not  entitled  to  a  commission  because  a  rela- 
tive on  his  advice  bought  the  property,  when  it  does  not 
appear  that  the  husband  had  any  authority  to  employ 
the  plaintiff  or  the  owner  had  any  knowledge  of  such 
employment,  or  ratified  it,  or  that  the  husband  knew  that 
the  plaintiff  intended  to  make  any  charge  for  his  serv- 
ices.7 

§  106.    Employment  Necessary  to  Recovery  of  Commis- 
sions. 

' '  To  justify  a  recovery  there  must  be  an  employment 
of  the  broker  either  express  or  implied  from  the  circum- 
stances surrounding  the  transaction. "  8  "If  the  broker 
introduces  one  party  to  the  other  and  a  sale  results,  un- 
less he  is  able  to  show  employment,  that  fact  does  not 
entitle  him  to  compensation."  9 

"  To  entitle  a  broker  to  recover  commissions  for  ef- 
fecting a  sale  of  real  estate,  it  is  indispensable  that  he 
should  show  that  he  was  employed  by  the  owner  (or  on 
his  behalf)  to  make  the  sale.  A  ratification  of  his  act, 
where  original  employment  is  wanting,  may,  in  some  cir- 
cumstances, be  equivalent  to  an  original  retainer,  but 
only  where  there  is  a  plain  intent  to  ratify.  An  owner 
cannot  be  enticed  into  a  liability  for  commissions  against 
his  will.  A  mere  volunteer  without  authority  is  not  en- 
titled to  commissions  merely  because  he  has  inquired 
the  price  which  an  owner  asks  for  his  property  and  has 

•  Holley   v.   Townsend,    2   Hilt.    34    (N.    Y.    1858). 

7  Html    v.    Lee.    132   App.    Dlv.    110    (N.    Y.    1909). 

s  Benedict  v.  Pell,  70  App.  Dlv.  43  (N.  Y.  1902):  Fordtran  v.  Stowers.  113  S. 
W.  631  (Tex.  1908)  ;  Sanchez  v.  Yorba,  97  Pac.  205  (Cal.  1908),  (citing  Toomy  T. 
Dunphy,  86  Cal.  640;  25  Pac.  13). 

4  Bright  v.    Canadian   Int.   Stock   Yard  Co.,   83   Hun  482   (N.   Y.    1895). 


108  COMMISSIONS   AND   THEIR   EECOVERY. 

then  sent  a  person  to  him  who  consents  to  take  it.  A 
broker  has  no  better  claim  to  recover  for  voluntary  serv- 
ices rendered  without  employment  and  not  received  and 
acted  upon  by  the  owner  as  rendered  in  his  behalf  than 
any  other  volunteer.  It  is  not  true  that  an 

owner  may  not  declare  his  price  to  whom  he  will  without 
the  hazard  of  paying  commissions  to  those  who  volun- 
teer, unasked,  to  send  him  a  purchaser  on  his  own 
terms."10 

§  107.    Manner  of  Employment. 

The  employment  of  the  broker  is  usually  brought 
about  by  the  principal  listing  the  property  for  sale  with 
the  broker.  That,  of  course,  amounts  to  an  employ- 
ment.11 And,  as  we  shall  see  presently,  the  broker  may 
be  employed  by  a  third  person  in  behalf  of  the  principal, 
or  a  person  may  place  himself  in  such  relation  with  the 
broker  that  an  employment  will  be  implied,  or,  still  fur- 
ther, the  broker  may  proceed  to  act  without  being  ex- 
pressly employed,  and  what  he  does  is  accepted  or  ratified 
by  the  principal  in  such  manner  as  to  impose  a  liability 
upon  the  principal  for  commissions.12  Then,  too,  efforts 
have  sometimes  been  made  to  draw  distinctions  concern- 
ing the  nature  of  the  broker's  employment,— a  subject 
discussed  later  in  the  present  volume.13 

§  108.    Employment  Must  Be  by  Owner  or  Authorized 
Agent. 

To  entitle  a  recovery  for  broker's  commissions,  an 
employment  must  be  shown  by  the  person  to  be  charged, 
or  by  his  duly  authorized  agent.  A  wife  has  no  implied 

10  Benedict  T.  Pell,  70  App.  Div.  45   (N.   Y.   1902),  quoting  from  Pierce  v.  Thomas, 
4  E.    D.    Smith   354    (N.    Y.    1855). 

When  the  fact  of  employment  is  disputed,  the  question  should  be  left  to  the  Jury. 
De  Mars  v.  Boehm,  6  Misc.  38  (N.  Y.  1893). 

11  Ebert  v.  Wilcox,  155  Mich.  70  (1908).     See  Forms  36-38  infra. 
"See  |§   109-112  Infra. 

«  See  §  115  infra. 


BROKER    MUST    BE    EMPLOYED.  109 

authority  to  bind  her  husband  in  the  disposition  of  his 
real  estate.  Her  authority  must  be  shown.14  Where  the 
broker  is  employed  by  a  third  person,  the  execution  of 
the  contract  of  sale  by  the  owner,  with  full  knowledge  of 
the  facts,  operates  as  a  ratification  of  the  acts  of  the 
broker.15  And  so,  where  the  owner's  son  made  the  ar- 
rangements for  commission,  and  all  the  ensuing  negotia- 
tions were  had  with  the  son,  and  after  the  transaction 
was  concluded  the  broker  was  referred  by  the  owner  to 
the  son  for  the  payment  of  commission,  the  son's  author- 
ity to  employ  the  broker  and  promise  commission  is  in- 
ferentially  apparent.16 

§  109.    Ratification  Equivalent  to  Original  Employment. 

Another  way  in  which  the  relation  of  broker  and  prin- 
cipal may  be  created  is  by  ratification.  If  the  broker 
enters  upon  negotiations  without  authority  from  the 
owner  the  latter,  on  learning  of  it,  may  confirm  or  adopt 
the  acts.  Such  a  ratification  relates  back,  and  is  equiva- 
lent to  prior  authority.  As  we  shall  look  at  the  question 
of  ratification  only  from  the  standpoint  of  the  broker's 
right  to  commissions  in  case  his  acts  are  ratified,  we  shall 
not  need  to  enlarge  on  the  rights  of  third  persons  to  hold 
the  principal  upon  a  ratification. 

As  stated  in  Clark  on  Contracts,  719,  the  general  rules 
applicable  to  ratification  require  that  the  agent  must 
have  contracted  as  agent  and  not  on  his  own  account; 
that  the  principal  must  have  been  in  contemplation,  or 
at  least  ascertainable  at  the  tune;  that  the  principal  must 
have  been  in  existence;  that  the  contract  must  be  lawful 
and  must  have  been  such  as  the  principal  had  legal  capac- 
ity to  make,  and  that  the  ratification  must  be  with  a  full 

"Harrell  v.   Velth.   13   N.   Y.    St.    Rep.   738    (1888). 

« Charles  v.    Cook.    88   App.    Div.    82    (N.   T.    1903)  ;   Watklns  Co.   T.   Thetford,   96 
S.  W.   73.  74   (1906)  ;  Mercantile  Trust  Co.  v.   Nlggeraan.   119  Mo.  App.  56   (1906). 
»«  Pollatschek  v.   Goodwin,   17   Misc.   591    (N.   T.    1896). 


110  COMMISSIONS   AND   THEIR   RECOVERY. 

knowledge,  actual  or  constructive,  of  all  the  material 
facts. 


§  110.    Intent  to  Ratify  Must  Be  Plain. 

As  we  have  seen,17  to  entitle  a  broker  to  recover  com- 
missions for  effecting  a  sale  it  is  indispensable  that  he 
should  show  that  he  was  employed  to  make  the  sale. 
A  ratification  of  his  act,  where  original  employment  is 
wanting,  may,  in  some  circumstances,  be  equivalent  to 
an  original  retainer,  but  only  where  there  is  a  plain  intent 
to  ratify.18  An  owner  cannot  be  enticed  into  a  liability 
for  commissions  against  his  will.19  Katification,  how- 
ever, implies  a  knowledge  of  the  circumstances,  and  also 
of  the  right  to  reject  or  ratify.20 

Where  there  was  no  employment  and  the  owners  sold 
the  property  to  a  person  with  whom  the  broker  was  ne- 
gotiating almost  two  years  before,  and  who  at  that  time 
had  made  an  offer  through  the  broker,  there  is  no  ratifi- 
cation of  an  employment  of  the  broker  alleged  to  have 
been  made  by  the  owners'  agent,  especially  where  the 
owners  knew  nothing  about  any  claim  of  the  broker.21 

It  may  be  seen  that  confusion  may  easily  arise  in  the 
consideration  of  this  matter.  One  of  the  essentials 
requisite  for  the  recovery  of  broker's  commissions  is 
employment.  A  mere  volunteer  who  brings  a  customer 
to  a  vendor,  whom  the  latter,  without  further  acceptance 
of  the  broker's  services,  takes,  is  not  entitled  to  compen- 
sation,22 while,  on  the  other  hand,  where  original  employ- 
ment is  wanting,  a  ratification  of  the  broker's  acts  may 
become  equivalent  to  an  original  retainer,  where  there  is 
a  plain  intent  to  ratify.23  It  is  therefore  this  which  dis- 

"§§   104-107   supra. 

18  See  Wilson  v.  Dame,  58  N.  H.  392  (1878)  ;  Downing  Y.  Buck,  135  Mich.  639 
(1904). 

»  Benedict  v.   Pell,   70  App.   Div.   45    (N.   Y.    1902). 

»  King  v.   Mackellar,    109   N.    Y.    223    (1888). 

»  Cohn    v.    Lee,    132   App.    Div.    697    (N.    Y.    1909). 

*»§§   104-107  supra. 

*»§§  104.   106,   109  supra;  §  112  infra. 


BROKER   MUST   BE   EMPLOYED.  Ill 

tinguishes  the  two  situations,— in  the  one  case,  the  ven- 
dor takes  the  purchaser  but  refuses  to  recognize  the 
broker  because  not  engaged  to  make  the  sale,  while  in  the 
other  case  the  vendor  takes  the  purchaser  produced  by 
the  broker,  though  not  engaged  to  find  one,  and  mani- 
fests in  some  way  his  intention  to  ratify  what  the  broker 
did.  It  may  be  seen  how  differences  of  opinion  may 
easily  arise,  not  only  in  the  minds  of  juries,  but  with 
judges  and  lawyers  as  well,  as  to  whether  the  vendor 
treated  the  broker  as  a  "  volunteer  "  or  ratified  his  acts. 

§  111.    Ratification  by  Implication. 

Where  a  party  knows  that  the  services  were  being 
offered  by  a  broker  who  expected  pay,  the  acceptance  of 
the  services  by  the  principal  implies  an  agreement  for 
the  employment.24  If  the  owner  has  so  conducted  him- 
self that  the  broker,  acting  fairly,  had  the  honest  belief 
that  a  lawful  request  had  been  made  to  him  by  the  owner 
to  render  services  as  a  broker  in  the  sale  of  the  owner's 
real  estate,  and  if  the  broker,  acting  on  such  request,  ren- 
dered such  services,  then  the  law  would  imply  a  prom- 
ise by  the  owner  to  pay  to  the  broker  what  the  services 
were  reasonably  worth. 

Or,  if  the  broker,  without  having  been  requested  so 
to  do,  rendered  services  as  a  broker  in  the  sale  of  the 
owner's  real  estate,  under  circumstances  indicating  tha> 
he  expected  to  be  paid  therefor,  and  the  owner,  knowing 
such  circumstances,  availed  himself  of  the  benefit  of  those 
services,  then  the  law  would  imply  a  promise  by  the 
owner  to  pay  to  the  broker  what  those  services  were  rea- 
sonably worth.25  Nor  is  an  express  promise  to  pay  com- 
missions necessary.  If  the  services  were  requested  and 
a  sale  results  from  the  broker's  efforts,  the  law  implies 
the  promise  to  pay.26 

2«  Ballentine    v.    Boone,    130    Mo.    App.    616    (1908). 
»  Welnhouse   v.   Cronln,    68   Conn.    253    (1896). 
»  Jones   v.    Moore,   30   Ky.    Law   Rep.   603    (1907). 


112  COMMISSIONS   AND   THEIR   RECOVERY. 

But  the  principle  that,  when  a  party  knowingly  and 
without  objection  permits  another  to  render  services  for 
him,  the  law  implies  a  promise  to  pay  what  the  same  are 
reasonably  worth,  applies  only  when  one  knows  that 
services  are  being  rendered  for  him,  and  does  not  apply 
where  the  vendor  may  assume  that  the  broker  was  acting 
for  the  purchaser.27 

§  112.    Ratification  Must  Be  with  Full  Knowledge  of 
Facts. 

"Whatever  may  be  the  rule  in  cases  where  the  rights 
of  third  persons  are  involved,  as  between  the  immediate 
parties  to  the  transaction,  ratification  implies  a  conscious 
and  intended  approval  of  the  act  done.  It  rests  upon 
the  actual  and  existing  purpose  to  make  such  approval; 
and  to  meet  this  requirement  it  must  be  made  with  full 
knowledge  of  all  the  facts.28  Before  one  is 

called  upon  to  ratify  any  unauthorized  transaction  which 
has  been  undertaken  for  him  he  is  entitled  to  have  all  the 
facts  put  before  him,  and  then  he  is  entitled  to  a  rea- 
sonable time  in  which  to  act  before  he  can  be  compelled 
to  take  his  position  with  regard  to  the  transaction. 
(Hopkins  v.  Clark,  7  App.  Div.  (N.  Y.)  207,  213,  and 
authority  there  cited.) " 29 

Before  ratification  of  the  broker's  acts  can  be  in- 
ferred, knowledge  of  the  facts  on  the  principal's  part 
must  be  shown.30  "  It  is  essential  to  the  ratification  by 
the  principal  of  the  unauthorized  acts  of  his  agent,  or 
of  another,  that  he  should  know  what  were  the  acts  of 
him  who  assumed  to  act  as  his  agent,  for  there  can  be  no 
ratification  of  unauthorized  acts  without  knowledge  of 
them.  Therefore,  when  an  agent  assumes  to  enter  into  a 
contract  which  is  not  authorized  by  his  agency,  before 

CT  Downing  v.  Buck,  135  Mich.  638   (1904). 

28  Citing  Glenn   v.    Garth,    133   N.   Y.    18,    35. 

29  Burnham   v.   Lawson,    118   App.    Div.    391    (N.    Y.    1907). 
so  Maze  v.   Gordon,   96  Cal.   61    (1892). 


BROKER    MUST   BE   EMPLOYED.  113 

his  principal  can  be  said  to  have  ratified  it,  it  must  be 
proved  that  he  knew,  or  was  charged  with  knowledge, 
of  the  facts  regarding  the  transaction  and  the  terms  of 
such  contract." 31 

Knowledge  of  the  facts,  however,  must  not  be  con- 
founded with  knowledge  of  the  legal  effect  of  the  facts. 
Where,  for  instance,  a  party  knows  the  contents  of  a 
paper,  and  that  the  same  was  executed  by  his  agent  in 
his  (the  principal's)  name,  it  is  not  necessary  that  the 
principal  should  be  informed  of  the  legal  effect  of  those 
facts.32 

If  a  party  has  the  right  to  disaffirm  an  act  of  a  sup- 
posed agent,  the  number  of  grounds  upon  which  dis- 
affirmance  may  be  placed  is  immaterial.  The  agent's 
action,  if  unauthorized,  does  not  bind  the  principal  unless 
and  until  by  some  act  of  ratification  he  binds  himself. 
By  ratifying,  he  waives  any  right  to  disaffirm  upon  any 
ground,  known  or  unknown.  An  agent  is  presumed  to 
have  disclosed  to  his  principal,  within  a  reasonable  time, 
all  of  the  material  facts  that  came  to  his  knowledge 
while  acting  within  the  scope  of  his  authority.  After 
the  lapse  of  sufficient  time,  the  principal  is  presumed  to 
have  acted  with  knowledge  of  all  the  acts  of  his  agent 
in  the  line  of  his  agency.33 

M  Sterling  v.  De  Laune,   105   S.   W.   1169    (Tex.   1907). 

»2  Clark   v.    Hyatt,    118   N.    Y.    567    (1889). 

sa  Clark   v.    Hyatt,    118    N.    Y.    568,    569    (1889). 


CHAPTER  XI. 
BROKER  MUST  BE  PROCURING  CAUSE  OF  SALE. 

§  113.    General  Statement. 

The  broker  must  be  the  "  procuring  cause  "  of  the 
sale.  (§§  116-120.)  Promises  to  pay  commissions  are 
not  enforceable  if  there  is  no  consideration  to  support 
them.  (§  121.)  Unsuccessful  efforts  give  the  broker 
no  claim  against  the  principal.  (§§  122,  123.)  If  the 
purchaser  takes  title  in  another  person's  name,  the 
broker  is  not  thereby  deprived  of  commissions.  (§  124.) 

It  is  not  indispensable  that  the  purchaser  should  be 
introduced  to  the  principal  by  the  broker,  nor  that  the 
broker  should  be  personally  acquainted  with  the  pur- 
chaser, nor  that  the  broker  be  present  and  an  active  par- 
ticipator in  the  agreement,  if  the  sale  is  effected  through 
his  agency.  (§§  125-127.)  Advertisements  of  the  broker 
may  be  the  inducing  cause  of  the  sale  and  entitle  him  to 
commissions.  (§  128.) 

When  the  proposed  purchaser  abandons  the  broker, 
or  if  the  broker  gives  up  the  negotiations,  the  owner  may 
sell  to  the  same  purchaser  induced  to  purchase  by  an- 
other, without  becoming  liable  to  the  first  broker  for 
commissions.  (§  129.)  While  the  principal  may  not 
take  the  sale  into  his  own  hands,  without  terminating 
the  agency,  yet  where  the  broker  abandons  the  negotia- 
tions, the  employer  may  subsequently  sell  to  the  same 
person  without  liability  for  commissions.  (§  130.) 

§  114.    Methods  of  Earning  Commission. 

"  At  least  three  different  methods  of  earning  a  com- 
mission under  an  agency  contract  for  the  sale  of  real 

114 


BROKER   MUST   BE   PROCURING   CAUSE   OF   SALE.  115 

estate  may  be  provided:  First,  by  effecting  a  binding 
contract  of  sale  under  authority  given  to  the  agent  to 
make  such  contract  for  the  principal ; !  second,  by  pro- 
ducing a  purchaser  to  whom  a  sale  is  in  fact  made;  third, 
by  producing  a  purchaser  ready,  willing  and  able  to  buy 
on  terms  specified  in  the  agency  agreement. " 2  A  real 
estate  broker  may  be  employed  simply  to  find  a  pur- 
chaser either  generally  or  upon  certain  terms,  or  he  may 
be  employed  to  procure  a  binding  contract  of  sale.  The 
latter  class  of  cases  is  rare  and  the  general  duties  of  the 
broker  do  not  require  him  to  go  so  far.3  While  the  gen- 
eral obligation  of  the  broker  is  to  bring  the  buyer  and 
seller  to  an  agreement  (that  is,  a  meeting  of  the  minds 
upon  the  terms),  this  general  obligation  may  be  varied 
by  contingencies  and  broadened  or  narrowed  by  specific 
contract.4  A  broker  may,  by  agreement  with  his  prin- 
cipal, so  contract  as  to  make  his  compensation  depend 
upon  a  contingency  which  his  efforts  cannot  control,  even 
though  it  relates  to  the  acts  of  his  principal,5  and  the 
broker  is  bound  by  his  contract  even  though  it  be  a  hard 
one.6 

§  115.    Obligations  of  the  Broker. 

There  has  been  some  attempt,  also,  to  draw  a  very 
fine  distinction  concerning  the  broker's  obligation.  In 
one  case,7  it  was  said  that  "  The  authorities  recognize 
a  distinction  between  the  employment  of  a  broker  to  find 
or  procure  a  purchaser  for  the  property  of  another,  and 
the  employment  of  a  broker  to  effect  and  close  a  sale  of 
such  property.  In  the  one  case  the  broker  finds  the 

*  As  to  when   the  broker  has  authority  to  sign  a  contract,   see  §§  38-41   nupra. 
2  McDermott  v.   Manoney,   115  N.   W.  36   (Iowa   1908). 

•  Platt   v.    Johr.    9   Ind.    App.    60    (1893). 

«  Parker  v.  Walker,  86  Tenn.  568  (1888)  ;  Hinds  v.  Henry,  36  N.  J.  L.  3! 
8  See  §§  230  et  iteq.   as  to  agreements  to  wait  for  commissions,   making  commissions 
depend  upon  passing  of  title,  etc. 

•Colonial  Tr.   Co.    v.   Pacific  Co..   158  Fed.   279    (1907). 
1  Wiggins   v.    Wilson.   45   So.    1013    (Fla.    1008). 


116  COMMISSIONS   AND    THEIR   RECOVERY. 

purchaser  and  produces  him  to  the  property  owner,  who 
negotiates  and  effects  the  sale  with  such  purchaser;  in 
the  other  case,  the  broker  not  only  finds  the  purchaser, 
but  negotiates  the  sale  with  him  on  the  terms  authorized 
by  his  principal,  leaving  nothing  for  the  seller  to  do  but 
execute  the  necessary  transfers  of  the  title  to  the  prop- 
erty." 

But  in  McFarland  v.  Lillard,  2  Ind.  App.  163  (1891), 
it  was  held  that  there  is  no  meritorious  distinction  be- 
tween the  case  of  an  agent  undertaking  to  sell  and  one 
undertaking  to  find  a  purchaser ;  the  court  saying,  l '  The 
broker,  in  either  case  is  required  to  do  no  more  than  find 
a  purchaser.  He  can  not  do  the  selling,  unless  specially 
authorized  to  do  so  by  power  of  attorney.8  That  must 
be  done  by  the  principal.  The  undertaking  to  *  sell  '  in 
such  cases  is  no  more  than  an  engagement  to  find  a  pur- 
chaser who  is  ready  and  willing  to  buy. ' ' 9 

' '  Whether  a  broker  is  to  *  introduce  '  a  purchaser,  or 
to  '  find  '  or  '  procure  '  one,  or  whether  he  is  to  do  all 
these  things  combined,  his  duties  remain  practically  the 
same.  The  words  '  find,'  '  procure,'  '  introduce,'  are 
generally  used  synonymously  in  the  making  of  such  con- 
tracts, and,  whether  used  conjunctively  or  disjunctively, 
the  essential  thing  they  require  the  broker  to  do  is  to 
secure  a  customer  who  is  or  will  become  a  purchaser." 10 

"The  verb  'sell'  and  the  noun  'sale'  vary  in  meaning 
according  to  the  different  contexts  in  which  they  are 
used.  Ordinarily  a  sale  is  an  executed  contract — a  com- 
pleted transaction  binding  on  seller  and  buyer  alike.  In 
contracts  creating  the  relationship  of  principal  and  real 
estate  broker,  however,  a  different  meaning  is  generally 
given  by  construction.  The  broker  '  sells  '  when  he  finds 
a  purchaser  ready,  able  and  willing  to  buy  on  the  terms 

8  See  the  Indiana  statutes  as  to  who  may   make  contract  in   that  state. 

•Citing  Treat  v.  De  Cells,  41  Cal.  202;  Duffy  T.  Hobson,  40  Cal.  240;  Goss  v. 
Broom.  31  Minn.  484 ;  Reynolds  v.  Tompkins,  23  W.  Va.  229 ;  Lockwood  Y.  Rose,  125 
Ind.  588. 

v.   Johr,   9   Ind.    App.   60    (1893). 


BROKER   MUST   BE   PROCURING   CAUSE   OF   SALE.  117 

proposed  by  the  principal.  A  contract  for  commissions 
on  sales  entitles  the  broker  to  the  specified  compensa- 
tion whenever,  through  his  influence,  such  a  prospective 
purchaser  has  been  brought  to  the  principal,  though  by 
reason  of  some  fault  or  disinclination  of  the  latter,  the 
sale  is  never  completed,  or  is  consummated  on  terms 
somewhat  different  from  those  originally  proposed  by 
the  principal."11 

In  Covey  v.  Henry,  71  Neb.  124  (1904),  it  was  con- 
tended that  there  is  a  distinction  between  an  agent  to  sell 
and  an  agent  to  find  a  buyer;  that  in  the  one  case  the 
agent  has  power  to  make  the  sale  and  bind  his  principal, 
while  in  the  other  he  has  not.  The  court  said :  * '  As  be- 
tween the  seller  and  the  agent  this  is  a  distinction  with- 
out a  difference,  for  in  either  case,  if  there  were  a  valid 
employment,  the  seller  would  be  liable  to  the  agent  for 
his  commission  if  he  made  a  sale  or  found  a  buyer.  The 
only  difference  to  be  found  in  this  distinction  is  that,  in 
the  former  case,  the  buyer  could  demand  performance 
by  the  seller,  while  in  the  latter  case  he  could  not." 

§  116.    Procuring  Cause. 

"  The  undertaking  of  the  broker  is  to  make  efforts 
to  procure  a  purchaser,  but  if  he  fails  he  is  entitled  to  no 
pay  unless  there  is  a  special  contract."12  "  A  broker 
for  the  sale  of  real  estate  is  entitled  to  his  commission 
when,  in  the  language  of  the  cases,  he  '  is  the  procuring 
cause  of  the  sale  '  ;  that  is,  when  he  has  found  a  pur- 
chaser and  brought  him  to  his  employer  and  a  contract 
is  made  between  them  for  the  sale  of  the  property,  or  the 
purchaser  is  ready  to  purchase  and  the  seller  refuses  or 
is  unable  to  consummate  the  sale." 13 

11  Humphries    v.    Smith,    5    Ga.    App.    342    (1908). 
"Sussdorff  v.    Schmidt,    55   N.   Y.    321    (1873). 

"  Fraser  v.  Wyckoff,  63  N.  Y.  445  (1875);  Hoadley  v.  Savings  Bank  of  Dan  bury, 
44  L.  R.  A.  321  (1899)  ;  Lunney  v.  Healey,  44  L.  B.  A.  593  (1898). 


118  COMMISSIONS   AND   THEIE   RECOVERY. 

That  the  seller's  wife  refused  to  consent  to  the  ar- 
rangements, thereby  defeating  a  sale,  cannot  deprive  the 
broker  of  commissions,  if  the  other  requisites  exist.14 
The  same  is  true  even  though  the  property  be  the  home- 
stead. In  Young  v.  Ruhwedel,  119  Mo.  App.  241  (1906) 
the  court  said:  "  It  is  urged  that  as  the  farm  was  the 
homestead  of  defendant  and  his  wife,  and  therefore  their 
joint  estate,  the  contract  of  employment  must  be  held 
void  because  the  wife  was  not  a  party  to  it.  Eecently, 
in  the  case  of  Curry  v.  Whitmore,  111  Mo.  App.  204, 
where  the  sale  made  by  the  agent  employed  by  the  hus- 
band alone  was  defeated  by  the  refusal  of  the  wife  to 
sign  the  deed,  we  answered  the  argument  that  the  hus- 
band could  not  sell  the  homestead  without  his  wife's 
consent  by  saying,  *  Neither  can  a  husband  sell  any  other 
lands  and  make  perfect  title  without  his  wife's  consent. 
But  neither  of  these  conditions  will  relieve  him  of  lia- 
bility on  his  contract  for  the  sale  of  such  lands.  That 
is  a  matter  he  should  think  of  and  provide  against  at 
the  time  he  enters  into  his  obligations. '  If  plaintiff  pro- 
duced a  purchaser  possessing  the  requisite  qualifications, 
defendant  offered  no  legal  excuse  for  his  failure  to  con- 
summate the  sale  in  the  fact  of  his  wife's  refusal  to  sign 
the  deed."15 

§  117.    What  is  Required  to  Constitute  a  Broker  a 
"  Procuring  Cause." 

The  broker  may,  by  special  agreement,  impose  on 
himself  any  variety  of  conditions  upon  which  his  right 
to  commissions  should  depend,  but,  under  the  usual  em- 
ployment, the  broker  is  entitled  to  his  commissions  when 
he  procures  a  contract  of  sale  or  produces  a  purchaser, 
ready,  willing  and  able  to  purchase  on  his  principal's 

"Goldberg  v.  Gelles,  33  Misc.  797  (N.  Y.  1901);  Branch  v.  Moore,  105  S.  W. 
1180  (Ark.  1907). 

"Citing  McCray  &  Sons  T.  Pfost,  118  Mo.  App.  672. 


BROKER   MUST   BE   PROCURING   CAUSE  OP  SALE.  119 


terms.  This  is  the  rule  which  is  supported  by  the  weight 
of  judicial  opinion.16 

There  are  some  authorities  which  hold  that  the  broker 
must  go  further  and  procure  an  executed  contract  before 
he  is  entitled  to  commissions,  stating  that  "  to  procure 
a  purchaser  "  requires  the  procuring  of  an  enforceable 
contract.17 

The  requirement  is  discussed  at  length  in  Wilson  v. 
Mason,  158  111.  310,  311  (1895),  as  follows:  "  Some  of 
the  cases  go  so  far  as  to  hold,  that  the  broker  is  not  en- 
titled to  his  commissions  unless  the  sale  is  actually  ac- 
complished by  the  delivery  of  the  deed  of  the  land  from 
the  vendor  to  the  vendee  and  the  payment  of  the  purchase 
money  by  the  latter,  or  unless  it  is  proven  that  the  sale 
is  prevented  by  the  fault  of  the  vendor.  Other  cases 

14  Mooney  v.  Rider,  56  N.  Y.  238  (1874)  ;  Dnclos  v.  Cunningham,  102  N.  T.  678 
(1886);  Gilder  v.  Davis,  137  N.  Y.  506  (18°3)  ;  Martin  T.  Bliss,  57  Hun  157  (N.  Y. 
1890)  ;  Brady  v.  Foster,  72  App.  Div.  416  (N.  Y.  1902)  ;  Snydam  v.  Healy,  93  App. 
Div.  396  (N.  Y.  1904);  King  v.  Knowles,  122  App.  Div.  414  (N.  Y.  1907);  Scott  T. 
Neuberger,  58  Misc.  22  (N.  Y.  1908)  ;  Rae  Co.  v.  Kane.  132  App.  Div.  935  (N.  Y. 
1909)  ;  Hinds  v.  Henry,  36  N.  J.  L.  332  (1873)  ;  Ryer  v.  Turkel,  70  Atl.  68  (N.  J. 
1908);  Fisher  Co.  v.  Realty  Co.,  159  Mo.  562  (1900);  Gerbart  T.  Peck,  42  Mo.  App. 
651  (1890);  Morgan  v.  Keller,  194  Mo.  680  (1905);  Hannan  T.  Prentls,  124  Mich. 
419  (1900);  Flower  v.  Davidson,  44  Minn.  46  (1890);  Covey  T.  Henry,  71  Nebr.  124 
(1904);  McFarland  v.  Lillanl.  2  Ind.  App.  163  (1891);  Platt  T.  Johr,  9  Ind.  App.  60 
(1893)  ;  Vinton  v.  Baldwin,  88  Ind.  105,  106  (1882),  (citing  Lane  T.  Albright.  49  Ind. 
27o ;  Love  v.  Miller.  53  Iml.  294 ;  21  Am.  R.  192 ;  Reyman  v.  Mosher,  71  Ind.  596 ; 
Moses  v.  Bierllng,  31  N.  Y.  462;  24  Alb.  L.  J.  536;  Hart  v.  Hoffman.  44  How.  Pr. 
168;  and  Pickett  v.  Badger.  1  C.  B.  (N.  S.)  296)  ;  Crevellng  v.  Wood,  95  Pa.  St.  157 
(1880);  Lockwood  v.  Halsey,  41  Kans.  170  (1889);  Hears  v.  Jones,  102  Me.  490 
(1907);  Jones  v.  Moore,  30  Ky.  Law  Rep.  605  (1907);  Yoder  v.  Randol,  83  Pac.  537 
(Okla.  1905)  ;  s.  c.,  3  L.  R.  A.  (N.  S.)  576;  Lunney  v.  Healey,  44  L.  R.  A.  623  (1898)  ; 
McLaughlin  v.  Wheeler,  1  S.  D.  521  (1891),  (citing  Hamlin  v.  Schulte,  34  Minn.  534; 
27  N.  W.  301  ;  and  Hannon  v.  Moran,  71  Mich.  261  ;  38  N.  W.  909)  ;  Block  T.  Ryan. 
4  App.  Cas.  D.  C.  283  (1894);  Dot  son  v.  Milliken.  27  App.  D.  C.  514  (1906),  (citing 
Koch  v.  Emmerliiig,  22  How.  69 ;  16  L.  Ed.  292 ;  McGavock  v.  Woodlief,  20  How.  221 ; 
15  L.  Ed.  884  ;  Bryan  v.  Albert,  3  App.  D.  C.  180,  181 ;  Cheatham  T.  Yarbrough.  00 
Tenn.  77,  79;  15  S.  W.  1076;  Washburn  v.  Bradley,  169  Mass.  86,  88;  47  N.  E.  512; 
Holden  v.  Starks,  159  Mass.  503  ;  38  Am.  St.  Rep.  451  ;  34  N.  E.  1069 ;  and  Knapp  T. 
Wallace,  41  N.  Y.  477)  ;  Cheatham  v.  Yarbrough,  90  Tenn.  79  (1891),  (citing  Mech. 
on  Agency,  §§  966.  967 ;  2  Am.  &  Eng.  Ency.  of  Law,  578,  581 ;  2  Add.  on  Contracts 
(Morg.  Ed.),  §  931;  Cook  v.  Fish,  12  Gray  493;  88  Ind.  104;  s.  c.,  45  Am.  B.  447: 
57  Cal.  224;  31  Md.  270;  Gllchrist  v.  Clarke.  2  Pickle  585;  Parker  T.  Walker,  2 
Pickle  569.  and  dissenting  opinion  in  the  same  case.  573)  ;  Fltzpatrick  T.  Gilson,  176 
Mass.  477  (1900),  (citing  Middleton  v.  Thompson,  163  Penn.  St.  112;  Fischer  v.  Bell. 
91  Ind.  243:  Vinton  v.  Baldwin.  88  Ind.  104;  Peet  v.  Sherwood,  43  Minn.  447;  Budd 
v.  Zoeller.  52  Mo.  238 ;  Buckingham  v.  Harris,  10  Colo.  455 ;  Cook  v.  Welch.  9  Allen 
350;  Desmond  v.  Stebbins,  140  Mass.  339;  and  Keys  v.  Johnson.  68  Penn.  St.  42); 
Monroe  v.  Snow.  131  111.  136  (1891),  (citing  McOavock  v.  Woodlief,  28  How.  221; 
Doty  v.  Miller.  43  Barb.  (N.  Y.)  529;  and  Bailey  v.  Chapman,  41  Mo.  537).  Bat  see 
Wilson  v.  Mason,  158  111.  .'510  (1895),  a  fairly  full  quotation  from  which  Is  given  in 
tliis  section.  In  another  Illinois  case,  decided  before  Wilson  v.  Mason,  it  was  said: 
"In  order  to  !>e  entitled  to  commissions  it  is  indispensable  that  the  broker  should  show 
that  lie  has  produced  a  purchaser  ready  and  willing  to  take  the  property  on  the  terms 
s|MH*lflei],  or  that  his  efforts  were  the  procuring  cause  of  the  sale  which  the  principal 
lias  made  to  the  purchaser  with  whom  he  has  been  brought  into  communication."  Davis 
v.  Cassette.  30  111.  App.  47  (1888). 

"  Parker  v.  Walker,  86  Tenn.  569  (1888).  See  also  Emery  r.  Atlanta  Exchange. 
88  Ga.  326  (1891).  See  also  §  118. 


120  COMMISSIONS   AND   THEIR   RECOVERY. 

seem  to  hold  that  the  broker  is  entitled  to  his  commis- 
sions when  the  minds  of  the  vendor  and  purchaser  meet 
in  a  verbal  agreement  for  the  sale  by  the  one  and  the 
purchase  by  the  other  of  the  land.  We  are  not  inclined 
to  follow  either  of  these  classes  of  cases,  regarding  them 
as  extreme  and  exceptional.  The  true  rule  is,  that  the 
broker  is  entitled  to  his  commissions,  if  the  purchaser 
presented  by  him  and  the  vendor,  his  employer,  enter 
into  a  valid,  binding  and  enforceable  contract.  If,  after 
the  making  of  such  a  contract,  even  though  executory  in 
form,  the  purchaser  declines  to  complete  the  sale  and 
the  seller  refuses  to  compel  performance,  the  broker 
ought  not  to  be  deprived  of  his  commissions.  He  has 
done  all  that  he  can  do  when  he  produces  a  party  who  is 
able,  and,  in  binding  form,  offers  to  purchase  upon  the 
proposed  terms.  An  agreement  by  a  real  estate  broker  to 
procure  a  purchaser  not  only  implies  that  the  purchaser 
shall  be  one  able  to  comply,  but  that  the  seller  and  the 
purchaser  must  be  bound  to  each  other  in  a  valid  contract. 
So,  where  the  agreement  of  the  real  estate  broker  is  to 
make  a  sale,  his  commission  is  earned  when  a  contract 
is  entered  into  which  is  mutually  obligatory  upon  the 
vendor  and  vendee,  even  though  the  vendee  afterwards 
refuses  to  execute  his  part  of  the  contract  of  sale  or  pur- 
chase.18 

"  An  oral  agreement  upon  the  part  of  the  purchaser 
of  land  would  not  be  a  valid  agreement;  and  if  he  re- 
fused to  complete  the  sale  of  the  land  after  such  oral 
agreement,  without  fault  upon  the  part  of  the  seller,  the 
obligation  of  the  broker  would  not  be  fulfilled,  and  he 
could  not  recover  his  commissions.19  Nor  would  a  writ- 

18  Citing  Parker  v.  Walker,  86  Tenn.  566;  Coleman's  Exrs.  v.  Mead,  13  Bush.  358; 
Francis  v.  Baker,  45  Minn.  83 ;  Love  v.  Miller,  53  Ind.  294  ;  Veazie  v.  Parker,  72  Me. 
443  ;  Willes  v.  Smith,  77  Wis.  81  ;  Rice  v.  Mayo.  107  Mass.  550  ;  Christensen  v.  Wooley, 
41  Mo.  App.  53 ;  Love  v.  Owens.  31  Mo.  App.  501 ;  Greene  v.  Hollingshead,  40  111.  App. 
195;  Short  v.  Millard,  68  111.  292;  Kerfoot  v.  Steele,  113  111.  610;  Ward  v.  Cobb,  148 
Mass.  518. 

"Citing  Parker  v.  Walker,  supra;  Middleton  v.  Findla,  25  Cal.  76;  Whitney  v. 
Cochran,  1  Scam.  209 ;  Christensen  v.  Wooley,  supra. 


BROKER    MUST   BE   PROCURING   CAUSE    OF   SALE.  121 

ten  agreement  be  binding  upon  the  purchaser  of  land, 
under  the  Statute  of  Frauds,  if  such  agreement  were 
signed  for  him  by  some  other  person  not  lawfully  au- 
thorized in  writing  to  do  so. ' ' 20  And  at  page  314  the 
court  says:  "  If  the  contract  is  of  such  a  character,  that 
the  vendee  can  successfully  plead  the  Statute  of  Frauds 
against  its  performance  in  a  suit  therefor  by  the  vendor, 
then  it  is  not  a  valid  contract  entitling  the  broker  to  his 
commissions  within  the  rule  already  laid  down. ' ' 21 

In  other  cases  there  are  expressions  which  lend  color 
to  this  view.  Thus  in  Flynn  v.  Jordal,  124  Iowa  458 
(1904),  it  was  said  that  where  no  sale  was  actually  con- 
summated the  broker  to  be  entitled  to  commissions  must 
either  have  procured  a  valid  obligation  to  buy,  or  have 
brought  the  proposed  purchaser  and  the  vendor  together 
so  that  a  contract  of  sale  might  have  been  entered  into  if 
the  vendor  had  so  elected. 

And  in  Kifer  v.  Yoder,  198  Pa.  St.  308  (1901),  it  was 
said:  "It  is  always  incumbent  upon  a  broker  seeking 
to  recover  a  commission,  to  prove  either  that  a  sale  was 
made  to  the  party  whom  he  procured  as  a  purchaser,  or 
that  the  purchaser  was  able  and  willing  to  buy  and  the 
failure  to  make  an  actual  sale  was  through  no  fault  of 
the  broker  or  his  customer."22 

§  118.    Procuring  Cause  as  Affected  by  Special  Contract. 

A  special  contract  supersedes  the  general  rule  as  to 
commissions,  and  when  such  a  contract  exists  the  broker 
must,  of  course,  comply  with  its  terms  before  he  is  en- 
titled to  commissions. 

"  Upon  the  general  question  concerning  the  services 
to  be  performed  by  a  land  broker  or  agent  to  entitle  him 
to  recover  upon  a  contract  for  commissions,  there  is  much 

»  Citing  111.  Rev.  Stat.,  Ch.  59,  §  2 ;  Cloud  v.  Greasley,  125  111.  313;  McGlnnls  T. 
Fernandes,  126  111.  228. 

21  Cf.  Monroe  v.  Snow,  131  111.  136  (1891).     See  also  |  118. 
**See  also  Fraser  v.  Wyckoff,   63  N.   Y.   445   (1875). 


122  COMMISSIONS   AND   THEIR   RECOVERY. 

confusion  in  the  cases.  It  is  apparently  held  by  some 
Courts  that  the  production  of  a  purchaser  who  is  ready 
and  willing  to  buy  upon  the  authorized  terms,  is  all  that 
is  required  to  entitle  the  agent  to  the  agreed  compensa- 
tion.23 Other  cases  hold  to  the  rule  that,  under  a  con- 
tract giving  the  agent  authority  to  sell,  and  providing  a 
commission  for  such  service,  the  mere  production  of  a 
purchaser  who  is  willing  to  buy  upon  the  stated  terms 
is  not  sufficient,  but  an  actual  sale  or  binding  contract  of 
sale  must  be  shown  before  a  recovery  can  be  had  upon 
the  agreement.2*  Many  of  the  decisions  involving  agent's 
and  broker's  commissions  turn,  more  or  less,  upon  the 
effect  of  the  custom  obtaining  in  such  business,  and  upon 
implied  obligations  growing  out  of  the  peculiar  circum- 
stances in  the  case  decided.  But  where,  as  in  this  case, 
there  is  a  special  contract  expressly  stating  the  terms 
and  conditions  of  the  obligation  entered  into,  there  is  no 
room  for  implication,  nor  can  its  terms  be  controlled  by 
reference  to  custom.  Consigney's  contract  empowered 
him  to  make  a  sale,  to  collect  the  cash  payments,  and  to 
retain  therefrom  his  commissions.  By  his  petition  he 
alleges  that  he  did,  in  fact,  make  a  sale,  which  appellants 
wrongfully  refused  to  carry  out  by  making  the  proper 
conveyance.  Upon  such  a  claim,  based  upon  such  an 
agency  we  have  heretofore  held  that  the  recovery  of  com- 
missions depends  upon  a  'consummated  sale' — not  nec- 
essarily a  sale  consummated  by  the  delivery  of  deeds  of 
conveyance,  but  such  a  contract  as  will  be  enforced  by  the 
Courts  if  enforcement  be  demanded.  Felts  v.  Butcher, 
93  Iowa  414.  The  doctrine  of  this  decision  is  well 


**  Citing  Knapp  v.  Wallace,  41  N.  Y.  479 ;  Davis  v.  Lawrence,  52  Kans.  383 ;  34 
Pac.  Rep.  1051 ;  Parker  v.  Walker,  86  Tenn.  566 ;  8  S.  W.  Rep.  391 ;  Potvin  v.  Curran, 
13  Neb.  302;  14  N.  W.  Rep.  400. 

**  Citing  Hammond  v.  Crawford,  66  Fed.  Rep.  425 ;  14  C.  C.  A.  109 ;  35  U.  S. 
App.  1;  Norman  v.  Reuther,  25  Misc.  Rep.  161;  54  N.  Y.  Supp.  152;  Keys  v.  John- 
son, 68  Pa.  42;  Haydock  v.  Stow,  40  N.  Y.  363;  Wilson  v.  Mason.  15S  Til.  304;  42 
N.  E.  Rep.  134;  49  Am.  St.  Rep.  162;  Olson  Y.  Jodon,  38  Minn.  4«8  ;  38  N.  W.  Rep. 
485;  Richards  v.  Jackson,  31  Md.  250;  1  Am.  Rep.  49;  De  Santos  v.  Taney,  13  La. 
Ann.  152;  Dorrlngton  v.  Powell,  52  Neb.  440;  72  N.  W.  Rep.  587;  Drur.v  v.  New- 
man, 99  Mass.  256;  Bradford  v.  Menard,  35  Minn.  197;  28  N.  W.  Rep.  248. 


BROKER    MUST   BE   PROCURING    CAUSE   OF   SALE.  123 

supported  by  the  authorities.  In  Wilson  v.  Mason  (158 
111.  304;  42  N.  E.  Rep.  134;  49  Am.  St.  Rep.  162)  the 
Illinois  Court  reviews  the  leading  precedents  and  holds 
the  true  rule  to  be  that  the  commission  of  an  agent  who 
undertakes  to  sell  (as  distinguished  from  a  mere  agree- 
ment to  find  a  purchaser)  *  is  earned  when  a  contract  is 
entered  into  which  is  mutually  obligatory  upon  the  ven- 
dor and  the  vendee.'  This  holding  is  fully  sustained  by 
the  other  cases  in  the  list  last  above  cited  (see  footnote 
24)  as  well  as  many  more  to  which  no  special  reference 
is  here  made.  The  rule  of  the  Felts  case  is  controlling 
in  the  present  controversy.  The  cross-petitioner's  ac- 
tion is  based  upon  a  special  contract  of  agency  to  sell, 
and  he  can  recover  only  by  proof  of  a  sale  in  fact ;  that  is, 
a  sale  so  far  consummated  as  to  be  valid,  binding  and  mu- 
tually obligatory  upon  the  parties — vendor  and  vendee. 
That  a  completed  sale  as  a  basis  for  the  recovery  of  com- 
missions was  contemplated  by  the  parties,  is  shown  in 
the  stipulation,  which  authorized  the  agent  to  retain  his 
compensation  from  the  first  cash  installment  of  the  price 
for  which  the  property  might  be  sold.  In  a  case  very 
similar  to  the  one  at  bar,  where  the  agent's  commission 
was  to  be  the  excess  obtained  over  a  fixed  net  price,  the 
Supreme  Court  of  Minnesota  has  said  that  a  provision  of 
this  kind  '  involves  the  proposition  that  a  sale  shall  be 
consummated'  before  an  action  by  the  agent  on  the  con- 
tract will  be  sustained.25 

"  In  the  preceding  division  of  this  opinion,  we  have 
held  that  no  contract  was  effected  between  Ormsby  and 
Consigney  which  equity  will  enforce  against  appellants. 
This  alone  has  been  held  sufficient  to  defeat  a  claim  for 
agent's  commissions  for  negotiating  an  alleged  sale.28 
And  such  seems  to  be  the  logical  import  of  the  opinions 
of  this  Court  in  Felts  v.  Butcher,  93  Iowa  414,  and  Burns 

»  Citing   Cremer   v.    Miller.    56    Minn.    52;    57    N.    W.    Rep.    318. 
wcitintt  Simonson  v.   Klssick,   4   Daly  143;  Crombie  v.  Waldo   (Super.   Ct.   N.    «.», 
17  N.   Y.  Supp.  373. 


124  COMMISSIONS   AND   THEIR   RECOVERY. 

v.  Oliphant,  78  Iowa  456.  See  also  Wilson  v.  Mason,  158 
111.  304;  42  N.  E.  Eep.  134;  49  Am.  St.  Eep.  162,  and  Ward 
v.  Cobb,  148  Mass.  518;  20  N.  E.  Rep.  174;  12  Am.  St.  Rep. 
587,  which,  while  not  parallel  cases,  have  a  bearing  upon 
the  principle  under  discussion. ' ' 27 

§  119.    General  Rule  as  to  "Procuring  Cause." 

As  will  be  noted,  there  is  some  conflict  of  opinion  as  to 
when  the  agent's  commission  is  earned;  in  other  words, 
as  to  when  he  is  the  "procuring  cause,"  some  of  the  au- 
thorities holding  that  the  procuring  of  an  enforceable 
contract  of  sale  is  requisite  to  recovery.  In  some  in- 
stances the  authorities  cited  for  the  latter  proposition 
do  not  sustain  it,  but  are  based  on  the  particular  nature 
of  the  employment,  or  relate  to  an  exchange  of  property, 
or  the  procuring  of  a  lease  and  not  to  a  sale. 

A  suggestion  will,  in  connection  with  what  has  been 
already  said,  assist  in  giving  the  proper  emphasis  to  the 
point  really  decided  in  these  cases.  Some  of  them  sus- 
tain the  proposition  that  the  broker  is  not  the  procuring 
cause  unless  he  secures  an  executed  contract  of  sale.  But 
it  is  not  true  that  the  authorities  cited  for  the  proposition 
all  sustain  it.  On  the  contrary,  it  will  be  found  that  some 
do  not  and  that  the  text  writers  and  even  the  judges  who 
do,  stumble  to  their  conclusions. 

The  cases  do  say  with  one  accord  that  the  broker  is 
entitled  to  commissions  when  he  procures  a  contract  of 
sale,  but  they  do  not  mean  that  the  broker  must  procure 
a  contract  of  sale  before  he  is  entitled  to  commissions. 
The  emphasis  should  be  on  this,  that  if  he  does  procure 
such  a  contract  his  commissions  are  earned.  But  by 
weight  of  authority  they  would  have  been  earned  also 
had  he  not  procured  the  contract,  but  instead  produced  a 
purchaser  ready,  willing  and  able  to  purchase. 

"Ormsby  T.   Graham,   123  Iowa  213.  216  (1904). 


BROKER   MUST   BE   PROCURING   CAUSE   OP   SALE.  125 

One  illustration  will  suffice  to  show  how  easily  errors 
are  made  in  this  matter.  In  a  comparatively  recent  case, 
already  cited,  but  which  we  refrain  from  now  singling 
out,  the  court  said  that  some  cases  hold  that  the  broker 
must  procure  the  contract  to  earn  his  commission,  and 
cited  authority  for  the  statement.  Yet  the  very  first  sup- 
porting citation  does  not  really  sustain  the  proposition. 
In  this  cited  case  the  fact  was  that  the  broker  had  pro- 
cured a  contract  of  sale  and  the  court  very  rightly  said 
that  this  entitled  him  to  his  commission,  but  nowhere  in 
the  entire  opinion  was  it  said  that  the  procuring  of  the 
contract  was  essential.  There  are  not  a  few  cases  cited 
in  support  of  the  statement  that  an  executed  contract  of 
sale  is  required  for  recovery  of  commissions,  which  are 
as  inadequate. 

The  statements  of  the  present  chapter  have  been  pur- 
posely confined  to  the  discussion  of  a  sale  or  exchange. 
Some  authorities  hold  that  the  case  of  a  broker  negotiat- 
ing a  loan  or  a  lease  is  the  same  as  that  of  a  broker  nego- 
tiating a  sale,  while  others  apply  a  somewhat  different 
rule  to  a  loan  or  lease.  There  are  states— Illinois,  for 
example— where,  as  has  already  been  indicated,  even  the 
decisions  of  the  same  court  conflict  on  the  question  as 
to  when  the  broker  is  the  procuring  cause  of  a  sale.  So 
there  are  instances— New  York,  for  example— where  the 
rule  applied  to  loans  is  somewhat  different  from  that  ap- 
plied to  sales.  The  subject  of  commissions  on  exchanges, 
on  loans  and  on  leases  is  discussed  in  Chapters  XVIII- 
XX  of  the  present  volume. 

§  120.    "Procuring  Cause"  when  Representing  Pur- 
chaser. 

A  broker  engaged  by  a  prospective  purchaser  to  pur- 
chase property  must,  in  order  to  entitle  himself  to  a  com- 
mission from  the  prospective  purchaser,  either  procure 


126  COMMISSIONS   AND   THEIE   EECOVERY. 

from  the  owner  and  deliver  to  the  purchaser  a  valid  con- 
tract for  sale  which  could  be  enforced  by  the  purchaser, 
or  obtain  from  the  owner  a  verbal  agreement  to  make  the 
sale,  and  bring  the  owner  and  prospective  purchaser  to- 
gether so  that  the  latter  may  have  an  opportunity  to  pro- 
cure such  a  contract.28 

Where  the  broker  represents  the  purchaser  and  has 
authority  to  buy  at  a  fixed  price,  the  broker  earns  his 
commission  when  he  produces  a  vendor  and  his  principal 
makes  a  valid,  binding  agreement  with  this  vendor,  and 
the  broker's  right  to  his  commission  is  not  affected  by  the 
inability  or  refusal  of  the  vendor  to  deliver  the  property. 
In  such  a  case,  the  broker  has  not  produced  a  vendor  able 
to  deliver  the  property,  and  would  not  have  earned  his 
commission  had  it  not  been  that  his  principal,  by  con- 
tracting with  the  vendor,  had  accepted  him.29 

§  121.    Effect  of  Promises  to  Pay  Commission. 

Acknowledging  in  the  contract  an  indebtedness  to  the 
broker  to  the  amount  of  his  customary  commission,  may 
be  taken  as  an  admission  that  the  sale  was  effected 
through  the  agency  of  the  broker.30 

But  even  where  the  owner  actually  promises  to  pay 
the  broker  commissions,  under  the  belief  that  the  broker 
was  the  procuring  cause  of  the  sale,  he  may  nevertheless 
resist  payment,  and  successfully  too,  if  in  fact  the  broker 
was  not  the  procuring  cause.31 

Without  an  employment,  or  the  performance  by  the 
broker  of  some  service  at  the  request,  express  or  implied, 
of  the  principal,  a  promise  by  the  latter  to  pay  commis- 
sions has  no  consideration  for  its  support  and  no  liability 
to  pay  is  created  by  it.32  And  so  it  was  said  that  in  the 

"Logan  v.  McMnllen,  87  Pac.  285  (Cal.  1906).     See  also  §  117  supra. 

»  Roche  v.   Smith,   176  Mass.   595.   at  597,   598;  51  L.   R.  A.  510   (1900). 

soRertfleld   v.   Tegg.   38   N.    Y.    214    (1868). 

«  Bellesheim   v.    Palm,   54   App.   Div.    77    (N.    Y.    1900). 

"Myers  v.  Dean,  132  N.  Y.  71,  72  (1892). 


BROKER    MUST   BE   PROCURING   CAUSE   OF   SALE.  127 

absence  of  a  written  contract  of  employment,  as  required 
by  the  New  Jersey  statute,33  a  subsequent  promise  to  pay 
commission  is  without  consideration.34  And  where  the 
promise  to  pay  commission  is  made  after  the  sale  is  al- 
ready consummated,  there  is  said  to  be  no  consideration 
for  the  promise.35 

§  122.    Unsuccessful  Efforts. 

In  one  of  the  leading  cases,36  the  New  York  Court  of 
Appeals  says:  "  A  broker  is  never  entitled  to  commis- 
sions for  unsuccessful  efforts.37  The  risk  of  failure  is 
wholly  his.  The  reward  comes  only  with  his  success. 
That  is  the  plain  contract  and  contemplation  of  the  par- 
ties. The  broker  may  devote  his  time  and  labor,  and  ex- 
pend his  money  with  ever  so  much  of  devotion  to  the 
interests  of  his  employer,  and  yet  if  he  fails;  if  without 
effecting  an  agreement  or  accomplishing  a  bargain,  he 
abandons  the  effort,  or  his  authority  is  fairly  and  in 
good  faith  terminated,  he  gains  no  right  to  commissions. 
He  loses  the  labor  and  effort  which  was  staked  upon  suc- 
cess. And  in  such  event  it  matters  not  that  after  his 
failure,  and  the  termination  of  his  agency,  what  he  has 
done  proves  of  use  and  benefit  to  the  principal.  In  a 
multitude  of  cases  that  must  necessarily  result.  He  may 
have  introduced  to  each  other  parties  who  otherwise 
would  have  never  met;  he  may  have  created  impressions 
which,  under  later  and  more  favorable  circumstances, 
naturally  lead  to  and  materially  assist  in  the  consumma- 
tion of  a  sale;  he  may  have  planted  the  very  seeds  from 
which  others  reap  the  harvest;  but  all  that  gives  him  no 

M  See  §   16  supra. 

"Leimbaeh  v.  Regner,  70  N.  J.  L.  609,  610  (1904).     See  also  j§  330,  333. 

"Wolvertcn   v.    Tuttle,   94   Pac.   963    (Ore.    1908). 

*>Sibbald   v.    Bethlehem   Iron   Co.,   83   N.    Y.    383    (1880). 

"See  Patten   v.   Willis,    134   111.   App.   649    (1907);   Newton  T.   Conness,   106   S.    W. 
893    (Tex.    1908);   Raleigh   R.   E.    &  T.   Co.   v.   Adams,    145   N.   C.    166   (1907);   Smith   v. 
Klmball,    193    Mass.    585    (1907).     As    to    consideration    for    promise    to    pay    commiss1 
though   the  broker  is  unsuccessful,   see  Kimroel  v.   Skelly.    130  Cal.   555   (1900).     See  alao 
§§   80-84. 


128  COMMISSIONS  AND   THEIR   RECOVERY. 

claim.  It  was  part  of  his  risk  that  failing  himself,  not 
successful  in  fulfilling  his  obligation,  others  might  be 
left  to  some  extent  to  avail  themselves  of  the  fruit  of  his 
labors.  As  was  said  in  Wylie  v.  Marine  National  Bank, 
61  N.  Y.  416,  in  such  a  case,  the  principal  violates  no 
right  of  the  broker  by  selling  to  the  first  party  who  offers 
the  price  asked,  and  it  matters  not  the  sale  is  to  the  very 
party  with  whom  the  broker  had  been  negotiating.  He 
failed  to  find  or  produce  a  purchaser  upon  the  terms  pre- 
scribed in  his  employment,  and  the  principal  was  under 
no  obligation  to  wait  longer  that  he  might  make  further 
efforts.  The  failure,  therefore,  and  its  consequences, 
were  the  risk  of  the  broker  only. ' ' 38 

In  Garcelon  v.  Tibbets,  84  Me.  148  (1891),  the  court 
said:  "It  is  now  the  well-settled  doctrine,  that  in  the 
absence  of  any  usage,  or  contract,  express  or  implied,  or 
conduct  of  the  seller  preventing  a  completion  of  the  bar- 
gain by  the  broker,  an  action  by  the  broker  for  his  com- 
missions will  not  lie  until  it  is  shown  that  he  has  effected 
or  procured  a  sale  of  the  property.  It  is  not  enough  that 
tlie  broker  has  devoted  his  tune,  labor  or  money  to  the  in- 
terests of  his  employer.  Unsuccessful  efforts,  however 
meritorious,  afford  no  ground  of  action.  Where  his  acts 
effect  no  agreement  or  contract  between  his  employer  and 
the  purchaser,  the  loss  must  be  his  own.  He  loses  his 
labor  and  effort  which  he  staked  upon  success.  If  no 
contract,  then  no  reward.  His  commissions  are  based 
upon  the  contract  of  sale.39  Of  course,  there  may  be  con- 
tracts between  the  broker  and  his  employer,  by  the  terms 
of  which  the  broker  may  become  entitled  to  his  commis- 
sions, even  though  a  bargain  or  sale  may  not  be  effected. 
In  such  cases  the  terms  of  the  contract  must  govern,  as 

»See  §  158  infra;  also  §  242  infra. 

» Citing  Viaux  v.  Old  South  Society,  133  Mass.  1,  10 ;  Loud  v.  Hall,  106  Mass. 
404,  407;  Tombs  v.  Alexander,  101  Mass.  255;  Koch  v.  Emmerling.  22  How.  (U.  S.) 
69;  Glentworth  v.  Luther,  21  Barb.  (N.  Y.)  147;  Drury  v.  Newman.  99  Mass.  256; 
Slbbald  v.  The  Bethlehem  Iron  Co.,  83  N.  Y.  383;  Cook  v.  Welch.  9  Allen  (Mass.)  350; 
Veazie  v.  Parker,  72  Me.  443;  Rockwell  v.  Newton,  44  Conn.  337. 


BROKER    MUST   BE    PROCURING    CAUSE   OF   SALE.  129 

in  Chapin  v.  Bridges,  116  Mass.  105,  and  Kice  v.  Mayo, 
107  Mass.  550." 

§  123.    Failure  Through  Fault  of  Principal. 

The  broad  statement  that  the  broker  when  unsuccess- 
ful gains  nothing  from  his  labor  and  effort,  "  must  be 
taken  with  one  important  and  necessary  limitation.  If 
the  efforts  of  the  broker  are  rendered  a  failure  by  the 
fault  of  the  employer;  if  capriciously  he  changes  his 
mind,  after  the  purchaser,  ready  and  willing,  and  con- 
senting to  the  prescribed  terms,  is  produced;  or  if  the 
latter  declines  to  complete  the  contract  because  of  some 
defect  of  title  in  the  ownership  of  the  seller,  some  unre- 
moved  encumbrance,  some  defect  which  is  the  fault  of 
the  latter,  then  the  broker  does  not  lose  his  commissions. 
And  that  upon  the  familiar  principle  that  no  one  can 
avail  himself  of  the  non-performance  of  a  condition  prec- 
edent, who  has  himself  occasioned  its  non-performance. 
But  this  limitation  is  not  even  an  exception  to  the  gen- 
eral rule  affecting  the  broker's  right,  for  it  goes  on  the 
ground  that  the  broker  has  done  his  duty,  that  he  has 
brought  buyer  and  seller  to  an  agreement,  but  that  the 
contract  is  not  consummated  and  fails  through  the  after- 
fault  of  the  seller.  The  cases  are  uniform  in  this  re- 
spect."40 

§  124.    Purchaser  Taking  Title  in  Another's  Name. 

11  An  agent  cannot  be  deprived  of  his  commission 
merely  because  the  actual  purchaser  takes  title  in  an- 
other's name."41  And  a  broker  does  not  lose  his  com- 
mission simply  because  the  purchaser  he  produced  did 
not  buy  in  person  but  through  an  agent,  provided  the 
agency  is  known  to  the  owner  of  the  property.42 

«>Slbbald   v.   Bethlehem  Iron   Oo.,   83  N.   Y.   383    (1880). 

«  Konner  v.  Anderson,  32  Misc.  511  (N.  Y.  1900),  (citing  Randrup  v.  Schroeder, 
22  Misc.  367). 

«  Minster  v.  Benoliel,  32  Misc.  630  (N.  Y.  1900).  As  to  the  matter  of  knowledge 
on  the  vendor's  part  that  the  purchaser  Is  the  broker's  customer,  see  §  130  infra. 


130  COMMISSIONS   AND   THEIR   RECOVERY. 

§  125.    Effort  Required  of  Broker. 

'  *  The  broker  must  be  the  efficient  agent  or  procuring 
cause  of  the  sale. "  43  It  is  not  indispensable  that  the  pur- 
chaser should  be  introduced  to  the  owner  by  the  broker, 
nor  that  the  broker  should  be  personally  acquainted  with 
the  purchaser;  but  in  such  cases  it  must  affirmatively 
appear  that  the  purchaser  was  induced  to  apply  to  the 
owner  through  the  means  employed  by  the  broker.44  But 
11  to  earn  a  commission  for  effecting  the  sale  of  real  es- 
tate, a  broker  must  do  something  more  than  get  author- 
ity from  the  owner  to  negotiate  the  sale.  He  must  be 
the  effectual  cause  of  the  sale.  He  must  find  the  pur- 
chaser, or  at  the  very  least  induce  a  purchaser  to  buy  the 
property  at  a  price  acceptable  to  the  owner,  and  the  sale 
must  proceed  from  his  efforts. ' ' 45  Where,  for  instance, 
a  person  ascertained  that  A  desired  to  sell  or  exchange, 
and  presented  A's  card  to  B  which  resulted  in  an  ex- 
exchange,  held,  the  broker  was  not  entitled  to  commis- 
sion.46 

"  All  the  cases  agree  that  the  disclosure  of  the  pur- 
chaser's name  and  the  putting  of  him  in  communication 
with  the  defendant  by  the  plaintiff  must  be  not  only  the 
foundation  upon  which  the  negotiation  was  begun,  but 
upon  which  it  was  conducted  and  the  sale  ultimately 
made.*7  The  broker  must  be  shown  to  be  the  procuring 
cause  of  the  sale.  The  intervention  of  the  plaintiff  in 
beginning  the  negotiations,  and  their  subsequent  culmi- 
nation in  a  sale,  will  not  suffice  unless  those  negotiations 
were  the  ultimate  cause  of  the  sale." 48 

"  To  entitle  a  broker  to  commissions,  he  must  have 

« King  Powder  Co.  v.  Dillon,  96  Pac.  441  (Colo.  1908)  ;  Platt  v.  Johr,  9  Ind. 
App.  61  (1893). 

«  Sussdorff  v.   Schmidt,   55  N.   V.   322   (1873).     And  see  §  00  supra. 

«  Scherer  v.  Colwell,  43  Misc.  391  (N.  Y.  1904);  Ayres  v.  Thomas,  11G  Cal.  144 
(1897);  Burch  v.  Hester,  109  S.  W.  399  (Te.x.  1908). 

«•  See  Walton  v.  M'Monxiw,  63  App.  Div.  147  (N.  Y.  1901);  afT'd,  175  N.  Y.  493 
(1903),  no  opinion. 

"Citing  Keener  v.   Harrod,   2  Md.   71;   Hollyday  v.   Southern   Agency.    100  Md.    296. 

"Walker  v.  Baldwin.  106  Md.  619  (1907).  See  J§  97,  98  supra,  237  infra  for 
subject  of  "Employment  of  Several  Brokers." 


BROKER   MUST   BE   PROCURING   CAUSE   OF   SALE.  131 

produced  a  purchaser  who  was  ready,  willing  and  able  to 
purchase  the  property  upon  the  terms  and  at  a  price  des- 
ignated by  the  principal.  Second :  The  broker  must  be 
the  efficient  agent  or  procuring  cause  of  the  sale.  The 
means  employed  by  him  and  his  efforts  must  result  in  the 
sale.  He  must  find  the  purchaser  and  the  sale  must  pro- 
ceed from  his  efforts,  acting  as  broker." 49 

"  It  may  be  doubtful  whether  merely  advising  the 
consummation  of  a  bargain,  of  which  the  efforts  of  a 
rival  (broker)  are  the  procuring  cause,  would  entitle  a 
broker  to  commissions.  It  ought  certainly  to  be  shown 
that  the  advice  given  contributed  so  materially  to  the 
result  as  to  be  fairly  entitled  to  be  regarded  as  the  pro- 
curing cause  of  the  transaction. ' ' 50 

If  a  proposed  purchaser  promises  to  pay  the  commis- 
sion in  case  he  purchases  because  the  vendor  would  pay 
no  commission,  and  the  property  is  subsequently  sold  to 
a  third  party,  who  in  turn  sells  to  the  proposed  pur- 
chaser, the  question  whether  the  commission  was  earned 
should  be  submitted  to  the  jury.51 

And  the  broker  must  procure  a  purchaser  during  the 
term  of  his  employment.  (See  §  138  and  also  Ch.  X.) 

§  126.    Presence  of  Broker. 

The  broker  need  not  of  necessity  be  present  and  an 
active  participator  in  the  agreement  of  buyer  and  seller 
when  that  agreement  is  actually  concluded.52  Brokers 
are  to  bring  buyer  and  seller  together;  they  need  have 
nothing  to  do  with  the  negotiation  of  the  bargain.53  The 
"  sale  "  which  brokers  are  to  make  under  the  ordinary 

"Cole  v.  Thornbnrg,  4  Colo.  App.  97  (1893).  (citing  Babcock  T.  Merrill,  1  Colo. 
App.  84,  and  cases  ciled ;  Anderson  v.  Smythe.  1  Colo.  App.  253). 

"•Davis   v.    Gassetle,    30   111.    App.   46    (1S88). 

«  Mutchnlck  v.   Friedman.    135   App.   Dlv.   356   (N.   T.   1909). 

62  Colonial  Tr.  Co.  T.  Pacific,  158  Fed.  280  (1907),  (clllng  SIbbald  T.  Belblebem 
Iron  Co..  83  N.  Y.  378;  Hoadley  T.  Savings  Bank.  71  Conn.  599;  42  Atl.  067;  44  L. 
R.  A.  321;  Vreeland  v.  Vetlerlein,  33  N.  J.  L.  247:  Keys  v.  Johnson.  68  Pa.  42; 
McMillan  v.  Beves,  77  C.  C.  A.  444;  147  Fed.  218;  French  v.  McKay,  181  Mass.  485; 
63  N.  E.  1068). 

"Creveling  r.  Wood,  95  Pa.  St.  157  (1880). 


132  COMMISSIONS   AKD   THEIR   RECOVERY. 

employment  is  usually  considered  as  effected  when  the 
minds  of  the  buyer  and  seller  are  brought  to  meet.54 
"  He  may  just  as  effectually  produce  and  create  the 
agreement,  though  absent  when  it  is  completed  and 
taking  no  part  in  the  arrangement  of  its  final  details. ' ' 55 
He  must,  however,  bring  the  minds  of  the  buyer  and  sel- 
ler to  an  agreement  for  a  sale,  and  the  price  and  terms 
on  which  it  is  to  be  made.56 

Where  the  broker  produced  to  the  owner  a  pro- 
posed purchaser,  and  a  memorandum  of  the  purchase 
and  sale  was  written  out  and  signed  by  the  seller  in 
duplicate  and  the  proposed  purchaser  took  them  and 
did  not  sign  them  in  the  form  they  then  were,  but 
made  some  material  erasures  and  interlineations  and  then 
signed  them,  and  the  seller  refused  to  re-sign  them  in 
their  altered  shape,  it  cannot  be  said  that  there  was  a 
meeting  of  the  minds  of  the  parties.57 

The  fact  that  the  broker  is  not  present  at  the  sale  is 
of  no  consequence,  for,  to  entitle  him  to  compensation, 
it  is  sufficient  that  a  sale  is  effected  through  his  agency, 
as  its  procuring  cause;  and  if  his  communications  with 
the  purchaser  are  the  means  of  bringing  him  and  the 
owner  together,  and  the  sale  results  in  consequence,  the 
compensation  is  earned,  although  the  broker  does  not  ne- 
gotiate and  is  not  present  at  the  sale.58  And  neither  need 
the  broker  transact  the  business  in  person.  After  he  has 
produced  the  buyer,  the  owner  may  conclude  the  trans- 
action, and  the  broker  will  not  lose  his  commission.59 
And  where  the  owner  concludes  the  sale  at  a  less  sum 
than  that  fixed,  the  broker  is  entitled  at  least  to  a  ratable 
proportion  of  the  agreed  commission.60 

"See  §   158.   159  infra. 

w  Sibbald  v.   Bethlehem  Iron  Co.,   83  N.   Y.  382   (1880). 

66  Id.     And  see  §  96  supra. 

"Bruce  v.  Hurlbut,  47  App.  Div.  163  (N.  Y.  1900).  See  also  §§  132-138  infrc,  is 
to  terms  of  sale. 

«Hobbs  v.  Edgar,  23  Misc.  618  (N.  Y.  1898);  Boqua  v.  Marshall,  114  S.  W.  714 
(Ark.  1908). 

s»  Baker  v.  Thomas,  11  Misc.  112  (N.  Y.   1895). 

<*  Martin  v.  Silliman,  53  N.  Y.  615   (1873). 


BROKER   MUST   BE   PROCURING   CAUSE   OP   SALE.  133 

§  127.    Introductions. 

If,  as  a  proximate  result  of  the  introduction  of  the 
purchaser  to  the  owner  by  the  agent,  the  owner  makes 
the  sale  himself,  either  personally  or  by  another  agent, 
it  will  not  exonerate  the  owner  from  the  payment  of 
commission  to  the  agent  who  has  initiated  the  negotia- 
tions.61 "  But  if  the  casual  connection  between  the  in- 
troducing agent  and  the  procurement  of  the  sale  be 
broken,  the  first  agent  is  not  entitled  to  any  commis- 
sion."62 

An  introduction  is  not  necessary  if  the  broker  is  ac- 
tually the  procuring  cause  of  the  sale.63  All  that  is  ne- 
cessary is  for  the  owner  before  making  the  sale  himself 
to  acquire  the  knowledge— it  matters  not  in  what  man- 
ner—that the  purchaser  is  the  client  of  the  broker  and 
has  been  procured  by  the  broker  to  purchase  the  specific 
piece  of  property  at  the  price  and  upon  the  terms  desig- 
nated.64 

Although  it  is  not  essential  that  the  broker  should 
have  introduced  the  buyer  to  the  owner,  or  even  have 
known  the  buyer,  or  that  the  owner  should  know  that 
the  broker  was  the  producing  cause  of  the  sale  to  the 
buyer,65  yet  it  must  affirmatively  appear  that  the  pur- 
chaser was  induced  to  apply  to  the  owner  through  the 
means  employed  by  the  broker.66 

It  is  not  necessary  that  the  broker  should  bring  the 
proposed  purchaser  into  the  physical  presence  of  the 
owner,  especially  so  where  the  owner  positively  refuses 
to  go  on  with  the  sale  under  any  terms.67  Where,  how- 

"Leyy  v.  Wolf,  84  Pac.  313  (Cal.  1905),  (citing  Tyler  T.  Parr,  52  Mo.  249; 
Jones  v.  Adler,  34  Md.  440). 

«2  Platt   v.   Johr,   9   Intl.    App.    61    (1893). 

«s  Leech  v.  demons.  14  Colo.  App.  48  (1899);  Wright  v.  McCllntock,  136  111.  App. 
441  (1907).  And  see  §  90  supra. 

"Church  v.  Dunham,  14  Idaho  782  (1908),  (citing  Wood  v.  Broderuon.  12  Idaho 
190;  85  Pac.  490;  Lemon  v.  De  Wolf,  89  Minn.  465;  95  N.  W.  316;  note  to  Ward  T. 
Cobb,  12  Am.  St.  Rep.  589). 

"Colonial   Trust   Co.    v.    Pacific  Co.,    158   Fed.    280    (1907). 

«•  Kalfstein  v.  Jackson,  132  App.  Div.  1  (N.  Y.  1909)  ;  Hafner  v.  Herron,  165  III. 
246  (1897). 

w  Uetzelsoha   T.    Donnelly,    50   Misc.    164    (N.    Y.    1906). 


134  COMMISSIONS   AND   THEIR   RECOVERY. 

ever,  *  *  the  broker  introduces  one  party  to  the  other  and 
a  sale  results,  unless  he  is  able  to  show  employment,  that 
fact  does  not  entitle  him  to  compensation."68  And  in 
Patten  v.  Willis,  134  111.  App.  651  (1907),  the  court  quotes 
from  Fessenden  v.  Doane,  188  111.  228-231,  as  follows: 
"  One  claiming  commission  for  the  sale  of  real  estate 
cannot  rightfully  claim  the  benefit  of  introducing  to  the 
defendant  a  purchaser  for  the  property  who  had  already 
been  introduced  to  him  as  such  by  another  party,  with 
and  through  whom  negotiations  were  already  in  progress 
and  were  continued  to  a  consummation  of  the  sale. ' '  The 
production  by  the  broker  of  a  contract  of  purchase  signed 
by  the  purchaser  is  legally  equivalent  to  the  production 
of  the  purchaser  himself.69 

§  128.    Advertising. 

Where  a  broker  is  employed  to  sell  property  and  he 
advertises  it,  and  an  intending  purchaser  is  attracted  by 
the  advertisements,  and  submits  an  offer  to  the  broker 
and  this  is  communicated  to  the  owner,  and  the  negotia- 
tions are  then  continued  without  interruption  until  a 
sale  is  consummated,  the  broker  is  entitled  to  commis- 
sions, even  though  the  sale  appears  to  have  been  finally 
consummated  between  the  owner  and  the  purchaser 
directly.70 

But  where  the  broker  advertised  the  property  in  the 
newspapers,  and  the  broker's  attention  was  attracted  to 
a  prospective  purchaser  by  the  advertisements  of  such 
purchaser,  and  wrote  letters  to  him,  but  never  saw  the 
purchaser  or  received  any  answers  to  his  letters,  nor 
ever  introduced  the  purchaser  to  the  owner,  the  effective- 
ness of  the  broker's  instrumentality  in  bringing  about 

68  Bright  v.  Canadian  Int.  Stock  Yard  Co.,  83  Hun  482  (N.  Y.  1895).  See  also 
"Employment,"  §§  103-112  svpra. 

«  Young  v.  Ruhwedel,  119  Mo.  App.  242  (1906). 

TO  Doran  v.  Bussard,  18  App.  Dlv.  387  (N.  Y.  1897)  ;  Bell  v.  Kaiser.  50  Mo.  150 
(1872);  Goffe  v.  Gibson,  18  Mo.  App.  4  (1885);  Latta  v.  King,  6  D.  C.  310  (1808). 


BROKER   MUST   BE   PROCURING   CAUSE   OF  SALE.  135 

the  sale  must  affirmatively  appear  if  commissions  are  to 
be  recovered.71 

§  129.    Consummation  of  Sale  by  Another  Broker. 

Where  a  broker  opens  negotiations  for  the  sale  of 
property  and  the  proposed  purchaser  abandons  the 
broker,  the  owner  may  sell  to  the  same  purchaser  in- 
duced to  purchase  by  another  broker,  without  becoming 
liable  to  the  first  broker  for  commissions.72  But  where 
the  principal  interferes  and  assists  another  broker  to 
bring  about  the  sale  by  authorizing  the  second  broker  to 
sell  for  less  than  the  first  brokers  were  authorized  to  sell, 
and  this  while  the  first  brokers  were  still  negotiating 
with  the  proposed  purchaser,  the  principal  cannot  escape 
liability  to  the  first  broker  on  a  sale  made  to  such  pro- 
posed purchaser.73 

Although  the  parties  are  originally  brought  together 
by  the  broker,  but  no  terms  are  agreed  upon,  and  some 
weeks  later  the  matter  is  taken  up  by  another  broker  who 
finally  consummates  the  sale  by  bringing  the  parties  to 
terms,  the  first  broker  is  not  entitled  to  commissions. 
To  earn  his  commission  the  broker  must  do  something 
more  than  get  authority  from  the  owner  to  negotiate  the 
sale.  He  must  be  the  effectual  cause  of  the  sale.  He 
must  find  the  purchaser,  or  at  the  very  least  induce  a 
purchaser  to  buy  the  property  at  a  price  acceptable  to 
the  owner.74 

Where  one  whose  attention  was  called  by  the  owner's 
broker  to  the  fact  that  certain  property  was  for  sale  re- 
fused to  make  such  broker  an  offer,  but  immediately  after- 
wards bought  the  property  through  another  broker  whom 

"  Hnlrerman    v.    Lining,    45    Misc.    397    (N.    Y.    1904). 

«  Wylie  v.  Marine  Nat.  Bank,  61  N.  Y.  415  (1875);  Burch  v.  Hester.  109  S.  W. 
399  (Tex.  1908)  ;  Maracella  v.  Odell.  3  Daly  123  (N.  Y.  1809). 

™  Holland  v.  Vinson,  124  Mo.  App.  417  (1907).  See  also  "Employment  of  Ser- 
eral  Brokers."  §§  97.  98  supra. 

T«  De  Zavala  v.  RoKallner,  45  Misc.  430  (N.  Y.  1904).  But  see  Crone  v.  Trust 
Co.,  85  Mo.  App.  601  (1900). 


136  COMMISSIONS   AND    THEIR   RECOVERY. 

she  represented  to  the  owner  to  be  entitled  to  the  commis- 
sions, it  was  held  that  the  owner's  broker  could  not  re- 
cover his  commissions  from  either  the  purchaser  or  her 
broker.75 

It  is  further  held  in  the  same  case — Oppenheimer  v. 
Barnett,  131  App.  Div.  614  (N.  Y.  1909) -that  where  the 
owner's  broker  calls  the  attention  of  a  person  to  the  fact 
that  the  property  is  for  sale,  that  in  no  way  obligates 
such  person  to  make  the  purchase  through  him;  on  the 
contrary,  such  person  may  go  directly  to  the  seller  and 
make  the  best  trade  he  can  with  him,  or  he  may  purchase 
through  some  broker  whom  he  selects  himself.  In  either 
case,  the  broker  whom  the  seller  had  originally  employed 
would  have  no  cause  for  complaint  against  the  purchaser 
or  against  the  broker  to  whom  the  seller  paid  the  com- 
missions. If  the  broker  is  entitled  to  commissions  at  all, 
it  is  from  the  seller,  and  if  the  broker  is  the  procuring 
cause  of  the  sale,  he  must  look  to  him  and  not  to  the 
purchaser.  The  purchaser  of  real  estate  is  not  obligated 
to  see  that  a  broker  employed  by  the  seller  gets  the  com- 
missions to  which  he  claims  he  is  entitled. 

In  another  case  where  the  broker  at  least  opened  up 
negotiations  which  were  concluded  in  good  faith  by  an- 
other broker,  the  first  broker  was  awarded  a  recovery  of 
commissions.  Here  defendant  placed  certain  property 
in  the  hands  of  various  agents  for  sale,  and  plaintiff,  who 
was  one  of  them,  showed  the  property  to  a  prospective 
purchaser,  who  objected  to  the  price,  whereupon  it  was 
agreed  between  plaintiff  and  defendant  that  the  latter 
should  negotiate  with  the  prospective  purchaser,  and  see 
if  terms  could  not  be  reached.  Defendant  tried  to  obtain 
an  interview  with  the  purchaser,  but  was  unsuccessful, 
after  which  the  purchaser  employed  a  broker  to  purchase 
the  property  for  him,  and  defendant,  without  knowledge 
that  the  sale  was  for  the  benefit  of  the  same  purchaser, 

TO  Oppenheimer  v.   Barnett,   131   App.   Div.   614    (N.   Y.    1909). 


BROKER    MUST   BE   PROCURING   CAUSE   OP   SALE.  137 

contracted  to  convey  the  property  to  the  broker's  party 
for  a  less  price.  Held,  that  plaintiff  was  the  procuring 
cause  of  such  sale,  and  was  entitled  to  commissions.76 

§  130.    Consummation  of  Sale  by  Principal. 

Where  the  agent  is  the  procuring  cause,  he  is  entitled 
to  commissions  even  though  the  negotiations  were  con- 
ducted and  concluded  by  the  principal  in  person.77 

"It  is  sufficient  to  entitle  a  broker  to  compensation 
that  the  sale  is  effected  through  his  agency  as  its  procur- 
ing cause,  and  if  his  communications  with  the  purchaser 
were  the  cause  or  means  of  bringing  him  and  the  owner 
together,  and  the  sale  resulted  in  consequence  thereof, 
the  broker  is  entitled  to  recover." 78  In  the  case  of  Lloyd 
v.  Matthews,  51  N.  Y.  124  (1872)  just  quoted  from,  it 
was  also  held  no  error  for  the  court  to  charge  that  where 
a  buyer  goes  directly  to  the  owner  and  shows  such 
familiarity  with  the  terms  of  sale  of  the  property— the 
price  asked,  for  instance— as  to  lead  the  owner  to  believe 
that  the  purchaser  must  have  acquired  his  knowledge 
from  some  one  who  knew,  it  may  become  the  duty  of  the 
owner  to  inquire  from  the  purchaser  who  gave  him  his 
information,  in  order  that  the  owner  may  inform  himself 
whether  or  not  the  purchaser  derived  his  information 
from  any  of  the  brokers  into  whose  hands  the  owner  had 
given  the  property  for  sale.79  And  some  of  the  authori- 
ties hold  that  the  fact  that  the  owner  did  not  know  that 
the  purchaser  had  been  sent  to  him  by  his  broker  is  im- 
material.80 

In  Quist  v.  Goodfellow,  99  Minn.  509  (1906),  it  was 

T'Schultz   v.    Zelman,    111    S.    W.    776    (Tex.    1908). 

"Morgan  v.   Keller,    194   Mo.   679    (1905). 

»  Lloyd  v.  Matthews,  51  N.  Y.  124  (1872);  Finch  v.  Betta,  134  111.  App.  475 
(1907);  Boqua  v.  Marshall,  114  S.  W.  714  (Ark.  1908);  Goldsmith  v.  Coxe.  61  S.  E. 
555  (S.  C.  1908).  See  also  §§  100.  101  supra  and  §§  240.  241  infra. 

79  See  also  Henninger  v.   Burch.   90  Minn.   43    (1903). 

80  See  Colonial   Trust  Co.    v.    Pacific   Co.,    158   Fed.    280    (1907),    In  which   the  court 
refers    to  Graves   v.    Bains,    78   Tex.   92;   Bryan   v.   Ahert,    3   App.    D.   C.    ISO;   Adams   v. 
Decker    34    III.    App.    17;    Kelly   v.    Stone.   91    Iowa   31C;    Mlllan   v.    Porter.   31    Mo.   App. 
563-  Tyler  v    Parr,  52  Mo.  249;  Ross  v.  Muskowltz,  95  S.  W.   (Tex.  Civ.  App.)  88. 


138  COMMISSIONS   AND   THEIR   RECOVERY. 

said:  "  Some  of  the  authorities  hold  that  a  real  estate 
broker  is  entitled  to  his  commission  where  his  efforts 
were  in  fact  the  procuring  cause  of  a  sale  though  made 
by  the  owner  in  good  faith  and  in  ignorance  of  his  ef- 
forts. *  *  To  entitle  the  broker  to  a  commission 
in  such  case,  where  there  is  no  exclusive  agency,  it  must 
appear  that  the  owner  knew,  or  from  the  circumstances 
ought  to  have  known,  that  the  broker  was  instrumental 
in  inducing  the  purchaser  to  enter  into  the  contract. 
Such  was  the  rule  laid  down  in  Cathcart  v.  Bacon, 
47  Minn.  34;  49  N.  W.  331,  and  it  is  the  law  in 
other  states.81  We  are  aware  of  the  fact  that  the 
authorities  are  somewhat  conflicting  upon  the  subject. 
(19  Cyc.  264.)  " 

In  another  case,82  it  was  said:  "  While  the  broker 
must  produce,  as  well  as  find,  a  purchaser,83  it  is  not  in- 
dispensable that  he  participate  in  the  negotiations  im- 
mediately resulting  in  a  sale,  or  even  that  the  owner  know 
that  the  purchaser  was  the  broker's  customer.84  A 
charge  to  the  effect  that,  in  the  absence  of  the  broker,  it 
was  the  duty  of  the  owner  to  ascertain  from  the  pur- 
chaser who  sent  him  was  held  correct  in  Bickart  v.  Hoff- 
man, 46  N.  Y.  St.  Repr.  886.  But  it  was  intimated  by 
this  court  in  this  department  that  there  might  be  circum- 
stances in  which  the  fact  that  the  owner  was  ignorant 
that  the  purchaser  was  the  broker's  customer  would  be 
controlling."85 

"  The  fact  that  the  defendant  did  not  know,  at  the 
time  of  making  the  sale  to  Shumaker,  that  the  latter  had 
been  procured  by  the  plaintiffs  is  immaterial.  The  right 
to  a  recovery  by  the  plaintiffs  depended  upon  the  fact 

<a  Citing  Soule  v.  Deering,  87  Me.  365;  32  Atl.  998;  Gamble  v.  Grether,  108  Mo. 
340;  83  S.  W.  306;  Tinges  v.  Moale,  25  Md.  480;  90  Am.  Bee.  73;  Wylie  v.  Marine, 
61  N.  Y.  415. 

"Jungeblut  v.    Glndra,    134   App.    Dlv.    293    (N.    Y.    1909). 

81  Citing  Gerdtng  v.   Haskln,   141   N.   Y.   514 ;   Rae  Co.   v.    Kane,    121   App.   Div.   494. 

84  Citing  Lloyd  v.  Matthews,  51  N.  Y.  124;  Sussdorff  v.  Schmidt,  55  N.  Y.  319; 
Wylle  v.  Marine  National  Bank,  61  N.  Y.  415. 

*  Citing  Metcalfe  y.   Gordon,  86  App.  Div.   368. 


BROKER    MUST   BE    PROCURING    CAUSE   OF   SALE.  139 

that  they  had  procured  the  purchaser,  and  not  upon  the 
knowledge  on  the  part  of  the  defendant  of  that  fact  at 
the  time  of  the  sale." 86 

Where  a  broker  employed  to  sell  lands  merely  called 
the  attention  of  a  prospective  purchaser  to  the  property 
without  notifying  his  principal  and  without  taking  fur- 
ther steps  in  the  matter,  he  is  not  entitled  to  commissions 
if  the  owner,  five  or  six  months  afterwards,  sells  the  land 
to  the  customer  without  knowledge  of  the  broker's  nego- 
tiations.87 

Where  a  broker  employed  to  sell  at  a  specified  price 
procures  a  proposed  purchaser  and  opens  negotiations 
with  him,  the  fact  that  the  employer,  without  terminat- 
ing the  agency  or  the  negotiations  so  commenced,  takes 
it  into  his  own  hands  and  concludes  the  sale  at  a  lower 
price,  or  upon  modified  terms,  does  not  deprive  the  broker 
of  his  right  to  commissions.88  But  where  the  broker 
opens  negotiations,  but  fails  to  bring  the  customer  to 
the  specified  terms  and  abandons  the  negotiations,  the 
employer  may  subsequently  sell  to  the  same  person  at 
the  price  fixed,  without  liability  for  commissions.89 
Where  negotiations  are,  in  good  faith,  broken  off  and 
abandoned,  and  a  sale  is  finally  effected  wholly  through 
the  influence  of  another  broker,  the  first  broker  is  not 
entitled  to  commissions.90  And  so  when  negotiations 
with  a  prospective  purchaser  are  broken  off  and  the 
broker  attempts  to  sell  him  property  of  other  persons,  he 
is  not  entitled  to  commissions  when  the  owner,  a  month 
afterwards,  sells  to  the  proposed  purchaser  on  different 
terms.91 
A  contract  employing  a  broker  to  sell  lands,  and  giv- 

"•Mlllan  v.  Porter.  31  Mo.  App.  570  (1888),  (citing  Tyler  T.  Parr,  52  Mo.  250; 
OofTe  v.  Cilison,  18  Mo.  App.  4). 

"-\Viit.Ts   &    Son    v.    RafaNky.    134   App.    Dlv.   870    (N.    Y.    1909). 

«"IIol,i,s  v.  K.K-ar.  2:!  Misc.  C1H  (N.  Y.  1898):  Wright  T.  McCllntock,  136  III. 
App.  442  (1907);  Phinlzy  v.  Bush.  129  Oa.  480  (1907):  Morris  v.  Francis.  75  Kans. 
580  (1907)  :  s.  c..  S!»  I'ac.  901;  Cook  v.  Forst.  110  Ala.  39B  (1896). 

80  Mnrkns    v.    Kenneally,    43    N.    Y.    Suppl.    1056    (1897). 

80  Walker   v.    Baldwin,    106   Md.    632    (1907). 

"Miller   v.    Vinlng,    112  App.    Dlv.    304    (N.   Y.    1906). 


140  COMMISSIONS   AND    THEIK    RECOVERY. 

ing  him  commissions  "  in  case  of  the  sale  or  conveyance 
of  said  property  at  any  time  within  one  year  from  this 
date,"  should  not  be  construed  to  mean  that  the  broker 
was  entitled  to  commissions  if  the  property  were  sold  by 
the  owner  without  the  aid  of  the  broker,  but,  on  the 
contrary,  only  entitles  the  broker  to  commissions  if  he 
was  instrumental  in  bringing  the  owner  and  purchaser 
together.92  And  where  a  broker  voluntarily  interposes 
in  a  transaction  between  the  principals,  but  even  then 
fails  to  bring  the  purchaser  up  to  the  terms  of  the  seller, 
he  is  not  entitled  to  a  commission  when  the  principals 
later  get  together  in  continuation  of  the  negotiations  and 
come  to  an  agreement.93 


»2  Parkhurst  v.  Tryon,  134  App.  Dlv.  843  (N.  Y.  1909).  See  also  subject  of 
exclusive  agency  in  §§  99  supra  end  239  infra. 

"swillard  v.  Ferguson,  125  App.  Dlv.  868  (N.  Y.  1908).  See  also  Klernan  v. 
Bloom,  91  App.  Div.  429  (N.  Y.  1904),  quoted  supra  §  96. 


CHAPTER   XII. 

SALE  MUST  BE  ON  EMPLOYER'S  TERMS. 
§  131.    General  Statement. 

The  broker  must  produce  a  purchaser  ready,  willing 
and  able  to  purchase  on  the  principal's  terms.  (§§  132, 
133.)  But  if  he  does  not  accomplish  the  precise  thing 
which  he  was  employed  to  do,  but  what  he  does  accom- 
plish is  accepted  by  the  principal,  the  broker  is  entitled 
to  a  commission.  (§§  134,  135.) 

If  a  price  is  fixed,  the  broker  must  procure  a  pur- 
chaser at  that  price;  but  the  price  may  be  increased  by 
the  principal  on  timely  notice  to  the  broker.  (§§  136, 
137.) 

The  broker  must  procure  a  purchaser  during  the  term 
of  his  employment,  and  where  no  definite  time  is  fixed 
he  has  a  reasonable  time.  (§  138.) 

The  broker  is  not  obligated  to  make  a  sale  unless  he 
expressly  contracts  to  do  so.  (§  139.) 

§  132.    Purchaser  Must  Agree  to  Seller's  Terms. 

Whatever  may  be  the  terms  and  conditions  upon 
which  the  broker's  right  to  compensation  depends,  they 
must  be  performed  as  a  condition  precedent  to  a  right 
of  action  for  a  commission.1  Where  the  terms  of  the 
sale  are  all  given  to  the  broker  in  advance,  he  must  pro- 
duce a  purchaser  ready,  willing  and  able  to  purchase  on 
those  terms,  and  the  owner  may  refuse  any  proposed  pur- 

i  Eraser  v.  Wyckoff.  63  N.  T.  445  (1875)  ;  Monson  v.  Kill,  144  111.  255  (1893)  ; 
Jensen  v.  Marohn,  119  N.  W.  988  (S.  D.  1909)  ;  Crosthwalte  T.  Lebus,  140  Ala.  525 
(1906).  As  to  variation  of  terms  by  owner,  see  §§  134,  135  infra. 

141 


142  COMMISSIONS   AND    THEIR    RECOVERY. 

chaser  who  is  not  willing  to  purchase  on  all  of  those 
terms.2 

On  the  other  hand,  if  the  broker  produces  a  person 
ready,  willing  and  able3  to  purchase  on  the  terms  pre- 
scribed by  the  principal,  the  latter  may  not  impose  new 
or  different  terms.4  A  change  of  terms  comes  too  late 
after  the  broker  has  negotiated  a  sale.5  A  broker  who 
has  procured  a  purchaser  for  lands  to  whom  the  defend- 
ant gave  a  written  receipt  for  earnest  money  paid, 
stating  all  the  terms  of  the  sale,  but  providing  for  the 
execution  of  a  formal  contract,  is  entitled  to  recover  his 
commissions  although  the  sale  was  not  consummated  by 
reason  of  the  fact  that  the  vendor  subsequently,  at  the 
time  fixed  for  signing  the  contract,  insisted  that  the  pur- 
chaser pay  accumulated  taxes  in  addition  to  the  price 
agreed  upon.6 

If  no  terms  are  laid  down  beforehand  by  the  princi- 
pal, the  broker  takes  the  hazard.  In  such  case  the  broker 
cannot  recover  commissions  unless  he  produces  a  pur- 
chaser ready,  willing  and  able  to  purchase  on  the  terms, 
whatever  they  may  be,  then  stated  by  the  principal.7 

§  133.    All  of  Seller's  Terms  Must  be  Met. 

All  the  terms  must  be  agreed  upon.    *  *  The  particular 
terms  of  the  contract  must  be  complied  with     * 
and  no  performance  upon  other  terms  will  suffice,  unless 
accepted    by    the    principal.  The    purchaser 

found  by  the  broker  must  be  not  only  ready,  willing  and 
able  to  purchase,  but  to  purchase  upon  the  terms  specified 
in  the  contract  of  employment. ' ' 8 

Smith  v.  Allen,   101  Iowa  608   (1897). 

See  §§   117-119   supra. 

Milne  v.   Ingersoll  Co.,    120  App.   Dlv.   465   (N.   Y.    1907).     See  also  §§   134,   135, 
147  infra. 

Com.    &   Inv.    Co.   v.    Real   Estate  Co.,    120   Mo.    App.    437    (1906). 

Phillips  v.   Kraft,    136  App.   Div.   859    (N.    Y.    1910). 

See  §   147  inrfo. 

8  Newton  v.  Conness,  106  S.  W.  894  (Tex.  1908)  ;  Wolher  Y.  Chambers,  128  111. 
App.  624  (1906). 


SALE    MUST   BE   ON    EMPLOYER'S   TERMS.  143 

Where  the  broker  produces  a  proposed  purchaser 
who  enters  into  a  writing  in  which  some  of  the  terms  are 
agreed  upon,  but  others  are  left  to  be  agreed  upon  in  the 
contract  of  sale,  the  broker  is  not  entitled  to  commission 
if  the  parties  are  unable  to  agree  on  these  other  matters.9 

Where  a  broker  is  employed  to  sell  a  whole  parcel 
of  land,  but  produced  purchasers  for  only  two  portions, 
and  after  the  lapse  of  a  reasonable  time,  the  owner,  in- 
dependently of  the  broker,  sold  the  two  portions  to  the 
purchasers  the  broker  had  found,  the  broker  is  not  en- 
titled to  commission  on  the  two  portions  sold.  Before 
the  broker  can  recover  on  such  a  contract  he  must  show 
performance  of  the  entire  contract.10 

If  the  purchaser  insists  upon  more  onerous  terms  in 
the  contract  than  those  which  were  verbally  agreed  upon 
between  the  parties,  the  owner  is  not  bound  to  execute  such 
a  contract,  and  under  such  circumstances  the  broker  does 
not  produce  a  purchaser  willing  to  execute  a  contract 
upon  the  terms  prescribed.11  And  so  where  the  broker's 
purchaser  refused  to  consummate  the  purchase  unless  the 
vendor  would  agree  to  give  him  a  warranty  deed,  which 
the  vendor  refused  to  do,  and  the  parties  could  not  agree 
as  to  the  form  of  the  deed,  the  broker  is  not  entitled  to 
commissions.  This  was  the  case  in  Garcelon  v.  Tibbets, 
84  Me.  148  (1891),  in  which  the  court  said:  "  The  efforts 
of  the  plaintiff  to  complete  the  sale  failed,  not  through 
any  fault  of  the  defendant,  but  by  reason  of  the  purchaser 
and  the  defendant  not  being  able  to  agree  in  reference  to 
the  form  of  conveyance.  The  purchaser  demanded  more 
than  the  law  exacts  where  there  is  no  agreement,  and  no 
form  of  conveyance  is  agreed  upon.  The  title  was  in  the 
defendant.  A  deed  of  release  or  quit  claim  of  the  usual 
form  would  have  conveyed  the  defendant's  title  and  es- 

•  Shapiro  v.  Nadler,  51  Misc.  13  (N.  Y.  1906).  See  Malnhart  v.  Poerschke,  32 
Misc.  97  (N.  Y.  1900),  where  the  time  of  closing  title  had  not  been  agreed  upon. 

10  Carpenter  v.  Atlas  Imp.  Co.,  123  App.  Div.  706  (N.  Y.  1908).  But  see  5  134 
infra. 

»  Weiss   v.    Rubinson,    112  App.   Dlv.   276    (N.    Y.    1906). 


144  COMMISSIONS   AND   THEIR   RECOVERY. 

tate  as  effectually  as  a  deed  of  warranty.  R.  S.,  Chap. 
73,  §  14.  An  agreement  or  covenant  to  convey  a  good 
title  does  not  necessarily  entitle  the  covenantee  to  a 
warranty  deed.  Kyle  v.  Kavanagh,  103  Mass.  356, 
359." 12 

The  broker  cannot  even  call  upon  his  principal  to  go 
to  the  place  of  business  of  the  other  party  and  there  make 
the  contract  or  negotiate  for  its  terms.13 

§  134.    Acceptance  by  Owner  of  Different  Terms. 

Where  the  broker  does  not  accomplish  the  precise 
thing  which  he  was  employed  to  do,  but  what  he  did  is 
accepted  by  the  owner  as  being  satisfactory,  the  broker 
is  entitled  to  commission.14 

If  the  broker  negotiates  a  contract  different  from 
that  prescribed  by  his  employer  and  the  employer  sub- 
sequently ratifies  it,  and  thus  a  contract  is  finally  made 
which  is  satisfactory  to  him,  then  the  broker  has  earned 
his  commission.15  This  applies  where  the  broker  has 
acted  in  good  faith,  and  the  contract  made  is  either 
signed  by  the  employer  himself  or  is  approved  or  rati- 
fied by  him.16  It  has  been  said,  however,  that  "  the  mere 
approval  of  the  contract  made  by  the  broker  where  it 
is  substantially  different  from  the  contract  he  was  em- 
ployed to  make,  cannot  of  itself  be  held  to  be  an  accept- 
ance by  the  owner  as  performance  of  the  broker's  obli- 
gation."17 

**  Also  citing  Gazley  v.  Price,  16  Johns,  267 ;  Ketchum  v.  Evertson,  13  Johns 
359  ;  Potter  v.  Tuttle,  22  Conn.  512.  See  also  §  160  infra. 

"Logan  v.  McMnllen,  87  Pac.   286   (Cal.   1906). 

"Davis  v.  Weber,  46  Misc.  591  (X.  Y.  1905);  Curry  v.  Fetter,  15  Ky.  Law  Rep. 
494  (1893);  Hoadley  v.  Savings  Bank,  44  L.  R.  A.  350  (1899);  Davis  v.  Cassette,  30 
111.  App.  44.  45  (1888);  McFarland  v.  Lillard,  2  Ind.  App.  167  (1891);  Reid  v. 
McNerney,  128  Iowa  350  (1905),  (citing  Welch  v.  Young.  79  X.  W.  59;  Grether  v 
McCormick.  79  Mo.  App.  325;  Henry  v.  Stewart,  85  111.  App.  170;  Hubachek  v.  Haz- 
sard,  83  Minn.  437;  86  N.  W.  426;  Hafner  v.  Herron.  165  111.  242;  46  X.  E.  211). 

« Lapsley  v.  Holridge,  71  111.  App.  o52  (1897);  Snyder  v.  Fearer,  87  111.  App. 
275  (1899)  ;  Levy  v.  Wolf,  84  Pac.  313  (Cal.  1905),  (citing  Gelatt  v.  Ridge,  117  Mo. 
653;  23  S.  W.  882;  Jones  v.  Adler,  34  Md.  440). 

"Glider   v.    Davis,    137    N.    Y.    506    (1893). 

"Reiger  v.   Bigger,   29  Mo.  App.   426    (1888). 


SALE    MUST   BE   ON   EMPLOYER'S   TERMS.  145 

§  135.  Broker's    Commission,    if  He    is    "Procuring 
Cause,"  Not  Affected  by  Variation  of  Terms. 

It  is  not  essential  to  entitle  a  real  estate  broker  to 
commissions,  that  he  should  have  procured  a  purchaser 
upon  the  precise  terms  first  named  by  the  principal  at 
the  time  of  employment;  for  if,  through  the  instrumen- 
tality of  the  broker,  the  buyer  and  seller  meet,  and  nego- 
tiations are  thus  opened  up  between  them,  which,  con- 
tinuing without  withdrawal  of  either  party  therefrom, 
culminate  in  a  sale,  though  for  a  less  sum  than  originally 
demanded,  the  broker  is  entitled  to  his  commissions.18 
Where  the  parties  are  brought  into  communication 
through  the  broker's  agency,  the  principal  by  negotiat- 
ing with  the  purchaser  on  different  terms,  waives  the 
terms  given  to  the  broker.19 

"  The  principal  possesses  an  undoubted  right  to  ad- 
here to  the  price  and  terms  originally  fixed,  but  if  he 
deviates  therefrom  and  consents  to  a  modification  thereof, 
and  thereupon  concludes  the  sale  with  the  person  pro- 
cured by  the  broker,  he  ratifies  the  latter 's  departure 
from  his  instructions  and  is  liable  for  the  commission." 20 

If  the  broker  is  the  procuring  cause,  although  the 
owner  makes  the  sale  at  a  less  sum  than  the  broker  was 
authorized  to  sell  for,  he  is  liable  to  the  broker  for  com- 
missions, and  if  not  for  the  full  sum  agreed  upon,  at  least 
for  compensation  for  the  reasonable  value  of  his  serv- 
ices.21 

§  136.    Requirements  as  to  Price. 

If  a  price  is  fixed,  the  broker  must  procure  a  pur- 
chaser at  that  price.22  And  where  the  broker  produces 

w  liObbs  v.  Edgar,  23  Misc.  618  (N.  Y.  1898)  ;  Jones  T.  Henry,  15  Misc.  152  (N. 
Y.  1895).  (citing  Levy  v.  Coogan,  16  Daly  137  (N.  Y.  1890);  Gold  v.  Serrell,  6  Misc. 
124  (N.  Y.  1893)  ). 

18  Davis   v.   Cassette,   30  111.   App.   44,  45    (1888). 

*>  Jones  v.  Henry,  supra;  Hafner  v.  Herron,  165  111.  246,  247  (1897);  Huntemer 
v.  Arent,  16  S.  D.  465  (1903). 

21  Hancock  v.    Stacy,    116  S.  W.    177   (Tex.    1909). 

22  See  Howell  v.   Denton,   68  S.   W.   1002    (Tex.   1902). 


146  COMMISSIONS   AND   THEIR   RECOVERY. 

a  purchaser  at  the  price  asked  by  the  owner,  the  latter 
cannot  then  impose  new  conditions.23  "Where  nothing  is 
said,  the  presumption  is  that  the  sale  is  to  be  for  all 
cash.24 

Where  it  is  agreed  that  the  broker  shall  have  commis- 
sions if  he  furnishes  a  purchaser  at  a  fixed  price,  he  is 
not  entitled  to  compensation  under  the  agreement  for 
furnishing  a  purchaser  at  a  less  price.25  In  such  a  case, 
it  has  been  said  that  the  broker  cannot  recover  propor- 
tionate commissions  on  the  lesser  sum,  or  what  his  serv- 
ices were  reasonably  worth,  when  he  did  not  declare  on  a 
quantum  meruit.26  But  it  has  been  held,  however,  that 
if  one  sues  to  recover  compensation  which  is  fixed  in 
amount  by  agreement,  he  may  recover  upon  quantum 
meruit  if  he  fails  to  establish  his  alleged  agreement. 
The  matter  is  one  of  pleading  and  proof  and  further 
comment  would  carry  the  discussion  too  far  from  the 
present  subject. 

While  the  price  is  almost  always  fixed  by  the  seller, 
yet  if  no  price  is  fixed,  it  has  been  said,  though  perhaps 
incorrectly,  that  the  broker  would  probably  have  the 
power  to  fix  the  price,27  but  it  is  quite  settled  that  where 
no  price  is  fixed,  the  broker  takes  the  hazard  of  produc- 
ing a  purchaser  willing  to  purchase  at  a  price  satisfac- 
tory to  the  seller.28  A  real  estate  broker  has  no  authority 
to  fix  the  price.29  Evidence  of  the  entry  of  the  price 
asked,  made  in  the  broker's  books  in  the  presence  of  the 
principal,  is  admissible  as  part  of  the  res  gest&?Q 

§  137.    Increase  of  Price  by  Owner. 

Where  an  owner  places  property  in  the  hands  of  a 

"McQuillen    v.    Carpenter,    72   App.    Dlv.    595    (N.    Y.    1902). 

24  Emery  v.   Atlanta   Exch.,    88   Ga.    325    (1891). 

28  Cook    v.    Forst,    116    Ala.    396    (1890K 

28  Stelnfeld   v.    Storm,    31    Misc.    167    (N.    Y.    1900). 

"Law  of  Contracts,  Special  Topics,   West  Pub.  Co.    (1896),   Topic   "Brokers,"  p.  9. 

zs  See  §§  138,    147  infra. 

2»Kllhan    v.    Wilson.    112   Fed.    569    (1902). 

»  Monroe  v.  Snow,  131  111.  132  (1890). 


SALE    MUST   BE   ON   EMPLOYER'S   TERMS.  147 

broker  and  fixes  a  price,  he  has  the  right  subsequently  to 
increase  the  selling  price,  but  until  notice  is  given  to  the 
broker  of  the  change  in  the  price,  he  is  justified  in  con- 
tinuing his  efforts  for  a  sale  at  the  price  first  fixed  and 
is  entitled  to  his  commission  whenever  he  obtains  a  pur- 
chaser who  is  willing  to  take  the  property  on  the  terms 
which  his  principal  prescribed.31 

§  138.    Time  of  Performance. 

The  broker  must  procure  a  purchaser  during  the  term 
of  his  employment.  Where  no  definite  time  is  fixed  the 
broker  has  a  reasonable  time  in  which  to  effect  a  sale.32 
What  is  a  reasonable  time  when  the  facts  are  undisputed 
and  different  inferences  cannot  reasonably  be  drawn 
from  the  same  facts,  is  a  question  of  law.33 

A  broker  employed  to  sell  land  within  a  specified  time, 
is  entitled  to  his  commission  where  he  procures  within 
such  time  a  purchaser  who  is  willing  to  buy,  and  com- 
municates such  fact  to  the  owner;  and  the  latter  cannot, 
by  deferring  the  time  of  meeting  with  such  purchaser 
until  after  the  expiration  of  the  agent's  term  of  employ- 
ment, defeat  his  right.34  And  where  the  broker  is  lim- 
ited in  time,  and  the  principal  and  the  proposed  pur- 
chaser found  by  the  broker,  by  mutual  consent,  delay  the 
consummation  of  the  transaction  until  after  the  expira- 
tion of  the  broker's  time  limit,  the  broker  is  entitled  to 
commissions.35 

And  it  has  been  held  that  the  broker  is  entitled  to 
compensation  even  though  he  did  not  bring  the  parties  to 
terms  within  the  time  limited  by  the  principal,  but  about 
a  week  or  more  thereafter.36  And  so,  where  brokers  are 

«  Van  Siclen  v.   Herbst.   30  App.   Div.   255   (N.   T.   1898). 

»2  Donovan  v.  Weed.  182  N.  Y.  43  (1905);  Rand  v.  Cronkrite,  64  111.  App.  224 
(1896).  See  also  §§  82-86  supra. 

*«  Wright  v.  Bank  of  Metropolis.  110  N.  Y.  237  (1888).  „«,<,„,    ,,0««» 

"  Vanderveer  v.  Suydam.  83  Hnn  116  (N.  Y.  1894);  aflTd,  151  N.  Y.  673  (1896) 
on  opinion  below;  Levy  v.  Wolf.  84  Pac.  315  (Cal.  1905). 

»  Humphries   v.    Smith,    5   Ga.   App.   342    (1908). 

••Griswold  v.  Pterce,  86  111.  App.  406   (1899). 


148  COMMISSIONS   AND    THEIR   RECOVERY. 

employed  to  purchase  property,  a  delay  of  two  years  for 
the  purpose  of  curing  the  title  will  not  defeat  the  recov- 
ery of  commissions  if  a  deed  is  finally  accepted  by  the 
purchaser  and  the  steps  of  the  transaction  are  con- 
nected.37 

"  Where  the  owner  of  property  employs  a  broker  to 
bring  him  an  offer  for  the  purchase  of  it  without  naming 
a  price  at  which  he  is  willing  to  sell, — that  is  to  say, 
where  the  owner  of  property  employs  a  broker  to  bring 
him  an  offer  which  he  is  to  pass  upon  after  it  is  brought 
to  him. — there  can  be  no  implied  agreement  or  under- 
standing that  the  broker  is  to  be  entitled  to  a  reasonable 
time  in  which  to  procure  such  an  offer;  in  such  a  case, 
the  owner  has  a  right  to  reject  every  offer  brought  to 
him,  as  was  held  in  Walker  v.  Tirrell,  101  Mass.  257;  and 
it  is  plain  that  under  those  circumstances  he  could  decide 
not  to  accept  any  offer  and  dismiss  the  broker  alto- 
gether. ' ' 38 

§  139.    Liability  of  Broker  for  Failure  to  Sell. 

"  The  broker's  engagement  is  to  use  his  efforts  to 
find  a  purchaser  while  his  employment  as  broker  endures, 
but  he  does  not  agree  to  find  a  purchaser  within  any 
specified  time,  or  at  all. " 39  "If,  while  still  employed, 
he  finds  one  at  the  seller's  terms,  he  is  entitled  to  his 
commissions,  but  the  question  of  the  reasonableness  of 
the  time  which  he  has  taken  does  not  affect  the  perform- 
ance of  any  contract  upon  his  part.  The  lapse  of  time 
between  the  day  of  employment  and  the  production  of  a 
purchaser  may  have  a  bearing  upon  the  duration  of  the 
employment  itself,  since  an  unreasonable  delay  may  im- 
port an  abandonment  upon  the  broker's  part,  upon  which 

«»  Michaels  v.   Gahren,   9  App.   Diy.   495    (N.   Y.    1896).     See  also   §   139  infra. 

48  Cadigan  v.  Crabtree,  179  Mass.  480  (1901);  s.  c.  on  further  appeal,  186  Mass. 
7  (1904). 

*»  Moore  v.  Boehm.  45  Misc.  622  (N.  Y.  1904)  ;  Attix  v.  Pelan,  5  Iowa  341,  342 
(1857)  ;  Glover  v.  Henderson,  120  Mo.  379  (1893). 


SALE    MUST   BE   ON    EMPLOYER'S    TERMS.  149 

the  principal  may  rely,  or  would  justify  the  principal's 
termination  of  the  employment,  as  against  an  imputation 
of  bad  faith;  an  abandonment,  however,  equally  with  an 
express  termination  of  the  employment,  is  matter  of  de- 
fense and  has  not  to  be  negatived  by  the  plaintiff  in  the 
course  of  his  proof  to  support  a  cause  of  action  for  com- 
missions. As  we  have  indicated,  the  broker 
does  not  sue  upon  his  performance  of  his  own  promise  to 
find  a  purchaser  (thus  importing  performance  within  a 
reasonable  time  as  an  element  of  his  own  case) ;  the 
promise  is  wholly  the  principal's  and  the  broker  avails 
himself  of  it  with  the  hope  of  the  reward  thus  held  out 
for  his  successful  efforts.  But  the  promise  is  for  a  rea- 
sonable time,  and,  if  the  broker's  success  is  delayed  un- 
reasonably, he  may  be  met  with  the  assertion  that  the 
time  has  run. ' ' 40 

But  if  the  broker  expressly  contracts  to  sell  property 
within  a  specified  time  for  a  specified  amount,  he  may  be 
liable  for  failure  to  do  so.41 


«o  Moore  v.  Boehm,  45  Misc.  622  (N.  Y.  1904).  In  Young  v.  Ruhwedel,  119  Mo. 
App.  241  (1906),  It  Is  said  that  the  consideration  Is  the  agreement  of  the  broker  to 
perform  the  services  required  by  the  terms  of  the  employment. 

«  Dunn   v.   Mackey,   80  Cal.   104,   107    (1889). 


CHAPTER   XIII. 
BROKER   MUST   ACT   IN   GOOD   FAITH. 

§  140.    General  Statement. 

The  broker  must  act  in  good  faith.  ( §  141.)  He  may 
forfeit  his  standing,— 

(1)  By  accepting  pay  from  or  acting  for  the  other 
party.     (§  142.) 

(2)  By  himself  becoming  a  principal  in  the  transac- 
tion.    (§  143.) 

(3)  By  not  accepting  the  best  terms  he  was  able  to 
secure.     (§  144.) 

An  agent  cannot  legally  make  any  profit  out  of  trans- 
actions carried  on  by  him  for  his  principal,  except  the 
reward  or  commission  agreed  upon  or  implied  by  law. 
(§§142,143.) 

Circumstances  may  exist  under  which  a  refusal  on 
the  part  of  the  agent  to  disclose  information  asked  for, 
would  not  imply  bad  faith.  (§  145.) 

§  141.    Good  Faith. 

"  Like  other  agents,  the  broker  is  required  to  exer- 
cise the  utmost  good  faith  towards  his  principal;  and  if, 
in  the  course  of  his  agency,  he  has  committed  a  fraud 
on  his  principal,  he  is  not  entitled  to  his  commissions."  * 
If  the  broker  acts  in  bad  faith,  the  principal  may  dis- 
charge him  and  complete  the  transaction  himself  with- 

M  Am.  &  Eng.  Ency.  of  Law  (2nd  Ed.),  971,  quoted  In  Low  v.  Woodbury.  107 
Ann.  DiT.  298  (N.  Y.  1905),  where  is  also  cited  Martin  v.  Bliss,  57  Hun  157  (N.  Y. 
1890)  ;  Whaples  v.  Pahys,  87  App.  Div.  518  (N.  Y.  1903)  :  Murray  v.  Beard.  102  N. 
Y.  505  (1886).  See  also  Hafner  v.  Herron,  165  111.  247  (1897);  Jeffries  v.  Robbins.  c><5 
Kans.  437  (1903);  Veasey  v.  Carson,  177  Mass.  117  (1900). 

150 


BROKER    MUST   ACT    IN   GOOD   FAITH.  151 

out  liability  for  commissions.2  "  There  is  a  want  of 
good  faith  on  the  part  of  the  agent  towards  his  principal, 
when  he  acts  adversely  to  his  principal's  interest,  or 
where,  representing  the  seller,  he  conceals  from  him  an 
arrangement  intended  for  the  advantage  of  the  buyer.8 
In  the  application  of  this  rule  it  makes  no  difference 
whether  the  result  of  the  agent's  conduct  is  injurious  to 
the  principal  or  not;  in  such  case,  the  misconduct  of  the 
agent  affects  the  contract  from  considerations  of  public 
policy  rather  than  of  injury  to  the  principal.  *  It  matters 
not,  that  there  was  no  fraud  meant,  and  no  injury  done. 
The  rule  is  not  intended  to  be  remedial  of  actual  wrong, 
but  preventive  of  the  possibility  of  it.'  Young  v.  Hughes, 
32  N.  J.  Eq.  372.  "4 

The  broker  is  not  required,  in  support  of  his  cause  of 
action,  affirmatively  to  establish  his  good  faith.  That 
he  did  not  act  in  good  faith  is  matter  of  defense.5 

§  142.  Accepting  Pay  from  or  Acting  for  Other  Party 
to  the  Transaction. 

A  broker  with  discretion  cannot  recover  commissions 
if  he  is  acting  for  both  parties,  unless  with  their  knowl- 
edge and  consent.6  Some  cases  go  to  the  length  of  hold- 
ing that  the  broker  may  not  accept  part  of  the  commis- 
sion of  the  broker  acting  for  the  other  party.7 

§  143.  Broker  as  a  Principal  in  the  Transaction,  or 
Making  a  Profit  Therefrom  Other  Than  His 
Commissions. 

Real  estate  brokers  purchasing  real  estate  as  agents 
for  an  undisclosed  principal  cannot  recover  commissions 

=  Featlierston   v.   Trone,    102   S.   W.    198    (Ark.    1907). 

•Titiiitf  Story  on  Agency,  §  334;  Pratt  v.  Patterson's  Exra.,  112  Pa.  St.  475; 
Preseott  v.  White,  18  111.  App.  322. 

4  Hnfner   v.    Herron.    105    III.    247    (1897). 

•••  1'Mll.itscl.ek  v.  (Joodwln.  17  Misc.  591  (N.  Y.  1896);  Colonial  Tr.  Co.  T.  Pacific 
Co.,  l.r,8  Fed  284  (H)07);  Cook  v.  Platt.  104  S.  W.  1133;  126  Mo.  App.  553  (1907). 

«  See   §§   47-58  supra  for   fuller  discussion  of  broker  acting  for  both   parties. 

?  See  Plotner  v.  Chillson,  95  Pac.  777  (1908),  (citing  McKlnley  r.  Williams,  74 
Fed.  95;  20  C.  C.  A.  313). 


152  COMMISSIONS   AND   THEIR   RECOVERY. 

of  the  vendors  for  effecting  the  sale.8  In  Hess  v.  Galla- 
gher, 64  Misc.  95,  96  (N.Y.  1909),  it  was  said:  "As  agents 
for  the  defendant,  the  plaintiffs  might  not  directly  buy 
from  or  sell  to  the  defendant  and  recover  for  services 
upon  their  own  contract  as  his  agents ;  because,  as  agents, 
they  were  and  would  be  under  legal  obligation  to  respect 
the  confidence  reposed  in  them  as  such,  and  could  not 
unite,  Jekyll  and  Hyde  like,  in  their  same  persons  the 
character  of  principal,  which  would  naturally  tend  to  a 
violation  of  the  confidence  reposed  in  them  as  agents  and 
by  whose  active  instrumentality  an  acceptance  of  de- 
fendant's offer  was  effected,  if  at  all;  and,  therefore, 
they  would  and  did  disentitle  themselves  to  recover  for 
services  therein,  because  *  contracts  which  are  opposed 
to  open,  upright  and  fair  dealing  are  opposed  to  public 
policy.  A  contract  by  which  one  is  placed  under  a  direct 
inducement  to  violate  the  confidence  reposed  in  him  by 
another  is  of  this  character. '  : 

§  144.    Broker  Must  Accept  Largest  Offer. 

An  agent  to  sell  stands  in  the  place  of  and  represents 
the  vendor  and  is  therefore  bound  to  discard  every  feel- 
ing of  friendship  toward  a  proposed  buyer,  to  know  no 
self-interest,  to  act,  as  in  his  judgment  the  interests  of 
the  vendor  would  induce  the  vendor  to  act,  if  present 
in  person  instead  of  being  present  by  an  agent.  It  is  his 
duty,  of  two  offers,  to  accept  the  one  which  would  most 
benefit  his  client.9  "  In  commenting  on  the  relation  of 
real  estate  brokers  to  their  principals  it  was  said  in  Rich 
v.  Black  et  cd.,  173  Pa.  92,  99,  that  '  the  relation  which 
such  agents  bear  is  confidential  and  disarms  the  vigi- 
lance of  their  principals ;  it  affords  peculiar  facilities  for 
obtaining  exclusive  information  in  respect  of  the  prop- 
erty entrusted  to  them  for  sale ;  their  employment  implies 

s  See  §§  59-71  supra,  151,   152  infra. 

8  Dictum  in  Haydock  v.  Stow,  40  N.  Y.  369  (1869),  citing  authorities.  S«e  also 
Plotner  v.  Chillson,  95  Pac.  776  (Okla.  1908)  ;  Bunn  v.  Keach,  214  111.  264  (1905). 


BROKER   MUST  ACT   IN  GOOD   FAITH.  153 

that  they  have  superior  advantages  for  making  sales  and 
that  they  will  use  every  effort  and  means  to  obtain  the 
highest  price  for  the  benefit  of  their  principal.'  See 
also  Addison  v.  Wanamaker,  185  Pa.  536." 10 

'  If,  after  receiving  instructions  to  sell  property  on 
certain  specified  terms,  the  agent  learns  that  other  and 
more  advantageous  terms  can  be  obtained,  it  is  his  plain 
duty  and  he  is  under  every  legal  and  moral  obligation  to 
communicate  the  facts  to  the  principal,  that  he  may  act 
advisedly  in  the  premises."11  Thus  where  a  broker 
was  authorized  to  sell  for  $105,000  or  more,  and  he  pro- 
cured a  purchaser  at  $105,000  when  he  might  have  pro- 
cured a  purchaser  at  $110,000,  he  is  not  entitled  to  re- 
cover commissions.12 

Where  the  brokers  secure  a  purchaser  at  the  price 
asked  by  the  seller,  but,  fraudulently  concealing  the  fact 
that  the  purchaser  has  acceded  to  the  terms,  endeavor  to 
beat  the  vendor  down  on  the  price,  they  cannot  be  said 
to  have  acted  in  good  faith.  And  so  it  was  held,  even 
in  a  case  where  the  broker  finally  submitted  the  offer 
originally  asked  for  and  the  owner  apparently  accepted 
it  but  later  refused  to  sign  the  contract.13  And  where 
the  broker  retains  part  of  the  price  he  obtains,  he  is 
guilty  of  fraud  and  forfeits  his  commission.14 

And  while  it  may  be  bad  faith  for  the  broker  to  en- 
deavor to  get  his  client  to  pay  more  for  the  property  than 
is  really  asked  by  the  owner,  yet  that  would  not  apply 
with  the  same  strictness  to  an  exchange  in  which  the 
broker  is  acting  for  both  parties  with  their  knowledge, 
and  he  endeavors  to  have  one  party  pay  or  allow  more 
for  the  property  he  is  to  take  in  order  to  equalize  the 
equities  and  thus  bring  about  an  exchange.15 

1° Wilkinson  T.   McCnllongh.    196  Pa.    St.   208,    209    (1900). 

"Holmes   v.    Cathcart.    60   L.    U.    A.    734    (Minn.    1903). 

"  Llchtensteln    v.    Case.    99   App.    Dlv.    570    (N.    Y.    1904). 

"Martin   v.    Bliss,   57   Hun   157    (N.    Y.    1890). 

"Deter  v.  Jackson.   76  Kans.   568   (1907).     See  §§   145,  250  infra. 

"Featherston  v.  Trone,  102  S.  W.  197   (Ark.   1907). 


154  COMMISSIONS   AND   THEIR   RECOVERY. 

§  145.    When  Refusal  to  Disclose  Information  is  Not 
Bad  Faith. 

Where  an  owner  of  land  agrees  to  pay  another  person 
as  compensation  for  securing  a  purchaser  for  the  land, 
all  above  a  minimum  sum  per  acre  and  a  fixed  sum  in 
addition,  and  such  person  sells  the  land  for  an  amount 
above  the  minimum,  the  fact  that  he  refuses  to  tell  the 
owner  for  how  much  he  sold  the  land,  or  states  to  him 
that  he  sold  it  at  the  minimum,  will  not  deprive  him  of 
his  right  to  recover  the  additional  fixed  sum  agreed  upon. 
In  such  a  case  there  is  no  such  relation  of  trust  and  con- 
fidence between  the  parties  as  will  require  a  disclosure 
to  the  owner  of  the  terms  of  the  sale.  There  is  no  prin- 
ciple of  law  that  obliges  one  who  has  made  an  honest  con- 
tract with  another,  to  communicate  to  that  other  any- 
thing subsequently  happening  that  might  be  an  induce- 
ment to  that  other  to  repudiate  his  contract.16 

M  Fulton  T.  Walters,   216  Pa.  St.  56  (1906). 


CHAPTER   XIV. 
AVAILABILITY   OF   PURCHASER. 

§  146.    General  Statement. 

The  broker  must  produce  a  purchaser  who  is  ready, 
willing  and  able  to  purchase  on  the  seller's  terms.  (§§ 
147,  148.)  To  procure  a  party  who  merely  takes  an  op- 
tion does  not  entitle  the  broker  to  commission.  (§  149.) 
But  having  produced  a  purchaser  ready,  willing  and  able 
to  purchase,  the  broker  cannot  be  deprived  of  his  com- 
missions by  a  subsequent  change  of  mind  on  the  part 
of  the  seller.  (§  150.) 

The  principal  has  the  right  to  demand  to  know  who 
the  purchaser  is;  but  may  waive  this  right.  (§§  151, 
152.) 

The  proposed  purchaser  must  not  only  be  ready  and 
willing,  but  also  able  to  purchase  on  the  terms  of  the 
seller.  But  the  seller  cannot  avail  himself  of  the  objec- 
tion that  the  customer  is  not  financially  able,  after  he 
has  accepted  the  purchaser  as  satisfactory  and  has  en- 
tered into  an  enforceable  contract  with  him.  (§§  153- 
155.) 

§  147.    Ready  and  Willing  to  Purchase. 

The  broker  must  produce  a  purchaser  ready,  willing 
and  able1  to  purchase  on  the  seller's  terms.2  The  minds 
of  the  seller  and  purchaser  must  be  brought  to  meet, 
through  the  broker's  agency.3  And  it  should  always  be 

*  As  to  ability  of  purchaser,  see  §§  153-155  infra. 

•Nolan   v.   East,    132   111.    App.    634    (1907);    King  Powder  Co.   T.   Dillon.   96  Pac. 
441    (Colo.    1908)  ;   Cook   v     Forst,    116  Ala.    397    (1896). 
»Runyon  v.  Wilkinson,  57  N.  J.  L.  422   (1894). 

155 


156  COMMISSIONS   AND    "THEIR    RECOVERY. 

borne  in  mind  that  some  authorities  hold  that  the  broker 
is  not  entitled  to  commissions  until  he  has  procured  an 
executed  contract.4 

If  the  seller  lays  down  his  terms  to  the  broker  before- 
hand, and  the  broker  produces  a  purchaser  ready  and 
willing  to  purchase  on  the  terms  laid  down,  the  commis- 
sions are  earned.5  If,  on  the  other  hand,  no  terms  have 
been  laid  down,  then  the  purchaser  produced  by  the 
broker  must  be  ready  and  willing  to  purchase  on  the 
terms  exacted  by  the  seller.6 

§  148.    Purchaser  Not  Ready  and  Willing. 

The  requirements  of  authorization  to  find  a  purchaser 
are  not  complied  with  by  producing  a  person  willing  to 
take  a  lease  for  a  long  term  with  the  privilege  of  purchas- 
ing.7 Where  no  statement  is  made  to  the  broker  that  the 
property  is  free  and  clear,  and  the  only  terms  laid  down 
by  the  owner  are  that  he  would  sell  at  a  satisfactory 
figure,  the  broker  is  not  entitled  to  commissions  for  pro- 
ducing a  proposed  purchaser  at  a  figure  satisfactory  to 
the  owner,  if  the  proposed  purchaser,  learning  that  there 
are  restrictions  on  the  property,  refuses  to  pay  the 
owner's  price  and  offers  a  smaller  amount.8  If  the  pro- 
posed purchaser  capriciously  or  unjustifiably  refuses  to 
contract,  he  cannot  be  regarded  as  a  ready  and  willing 
purchaser.9 

Where  one  whose  attention  was  called  by  the  owner 's 
broker  to  the  fact  that  certain  property  was  for  sale,  re- 
fused to  make  such  broker  an  offer  and  immediately 
afterwards  bought  the  property  through  another  broker, 
whom  she  represented  to  the  owner  to  be  entitled  to  the 

4  See  §§   117-119  supra. 

"Forrester  v.   Price.   6  Misc.   308    (N.   Y.    1893).     See  §   150. 

8  Forrester  v.  Price,  supra;  Fairchild  v.  Cunningham,  84  Minn.  524  (1901)  ;  Runyon 
v.  Wilkinson,  57  N.  J.  L.  421  (1894). 

TWooley   v.    Scbmal.    5   Ohio   Cir.    Ct.    76    (1890). 

"Weibler  v.   Cook.   77  App.   Div.   637    (N.   Y.    1902). 

•  Sheinhouse  v.  Klueppel,  80  App.  Div.  445   (N.  Y.  1903). 


AVAILABILITY   OF   PURCHASES.  157 

commissions,  the  owner's  broker  has  not  produced  a  pur- 
chaser, ready  and  willing,  and  cannot  recover  his  com- 
missions, either  from  the  purchaser  or  her  broker.10 

Where  the  broker  presents  a  person  who  assumes  to 
represent  an  organization  desiring  to  purchase,  and 
such  person  is  unable  to  produce  his  authority  for  enter- 
ing into  a  contract  on  behalf  of  the  organization,  and 
refuses  to  enter  into  the  contract  personally,  it  was  held 
in  Kirwan  v.  Barney,  29  Misc.  614  (N.  Y.  1899)  that  the 
owner  is  not  liable  for  commissions.  In  the  case  cited, 
the  court  quotes  from  Bennett  v.  Egan,  3  Misc.  421  (N. 
Y.  1893),  as  follows:  "  As  long  as  the  vendor  insists 
upon  something  he  has  a  right  to  insist  upon  as  a  con- 
dition of  sale,  and  to  which  the  vendee  refuses  to  assent, 
in  consequence  of  which  disagreement  the  vendee  re- 
fuses to  enter  into  an  enforceable  contract  of  sale,  it  can- 
not be  held  that  the  broker  has  procured  a  complete 
meeting  of  the  minds  of  the  vendor  and  vendee." 

If  the  purchaser  insists  upon  more  onerous  terms  in 
the  contract  than  those  which  were  verbally  agreed  upon 
between  the  parties,  the  owner  is  not  bound  to  execute 
such  a  contract,  and  under  such  circumstances  the  broker 
does  not  produce  a  purchaser  willing  to  execute  a  con- 
tract upon  the  terms  prescribed.11 

Where  a  broker  produced  a  proposed  purchaser  and 
an  informal  writing  was  entered  into,  according  to  which 
the  parties  were  to  meet  subsequently  and  execute  a  writ- 
ten contract  of  sale,  it  was  held  in  Feiner  v.  Kobbe,  13 
Misc.  499  (N.  Y.  1895)  that  the  broker  is  not  entitled  to 
commissions  if  the  purchaser  fails  to  attend  and  execute 
the  written  contract.  This,  on  the  ground  that  the  pur- 
chaser was  apparently  not  ready  and  willing  to  purchase 
the  property. 

In  the  case  cited,  however,  the  court  concluded  its 

*»  Oppenhelmer  v.   Barnett,   131   App.   Div.   614    (N.   Y.    1909). 
11  Weiss  v.   Rubinson,   112  App.   Div.   276   (N.  Y.   1906). 


158  COMMISSIONS   AND   THEIR   RECOVERY. 

opinion  as  follows:  "  The  defendant  insisted  upon  hav- 
ing a  formal  contract  in  writing  giving  in  detail  all  the 
terms  and  conditions  of  the  exchange,  and  had  a  right  to 
impose  this  condition  before  assenting  to  a  trade,  or  mak- 
ing himself  liable  for  brokerage.  The  failure  to  effect 
the  exchange  is  not  chargeable  to  any  misconduct  of  the 
defendant,  but  is  owing  to  inexcusable  absence  of  New- 
borg,  the  proposed  purchaser,  whom  the  plaintiff  im- 
pliedly  undertook  to  produce  at  the  time  and  place  ap- 
pointed for  the  execution  of  the  formal  contract. ' ' 

§  149.    Procuring  Person  who  Takes  Option. 

A  broker  is  not  entitled  to  a  commission  for  procur- 
ing a  party  who  enters  into  an  option  which  gives  him 
the  right  to  purchase  but  does  not  obligate  him  to  do  so, 
even  though  a  deposit  is  paid  on  such  option.12  And  so, 
if  the  broker  merely  produces  a  person  who,  without 
himself  agreeing  to  buy,  obtains  a  written  agreement 
from  the  owner  to  sell  and  afterwards  refuses  to  take 
title,  this  does  not  entitle  the  broker  to  commissions.13 

If  the  purchaser  enters  into  a  contract  which,  as  one 
of  its  conditions,  reserves  to  him  the  privilege  of  annul- 
ling the  contract  under  certain  contingencies,  there  is  no 
completed  transaction.14  Where  the  proposed  purchaser 
insists  on  a  clause  in  the  contract  that  in  case  he  rejects 
title  on  account  of  encroachments,  which  would  not 
otherwise  constitute  ground  of  rejection,  his  deposit 
shall  be  returned,  the  broker  is  not  entitled  to  commis- 
sions, as  the  contract  is  thus  rendered  a  mere  option.15 

If  the  broker  is  employed  by  a  prospective  purchaser 

w  Mllstein  v.  Coring,  102  App.  Div.  349  (N.  Y.  1905)  ;  Rnnck  v.  Dimmick.  Ill 
S.  W.  779  (Tex.  1908)  ;  Wilson  v.  Ellis,  106  S.  W.  1152  (Tex.  1908)  ;  Block  v.  Ryan, 
4  App.  Gas.  D.  C.  283  (1894).  See  also  Lawrence  v.  Rhodes,  188  111.  100  (1900),  where 
are  cited  Aigler  v.  Carpenter  Co.,  51  Kans.  718;  Kimberley  v.  Henderson,  29  Md.  512; 
Zeldler  v.  Walker,  41  Mo.  App.  118;  Dwyer  v.  Raborn,  6  Wash.  213.  And  see  §§  1G3, 
351  infra. 

13  Kampf  v.   Dreyer,   119  App.   Div.    134    (N.   Y.    1907)  ;   Runck   v.   Dimmick,   supra. 

14  Crockett  v.   Grayson,   98  Va.   354    (1900).     See  also  Ch.   XV,    "Transaction   Must 
be  Complete." 

"Hough  v.  Baldwin,  53  Misc.   284    (N.   Y.   1907). 


AVAILABILITY   OP   PUBCHASER.  159 

to  obtain  an  option,  the  above  rule  does  not,  of  course, 
apply,  and  the  broker  is  entitled  to  compensation  for  his 
services  if  he  accomplishes  the  object  of  his  employ- 
ment.16 

§  150.    Change  of  Mind  by  Vendor. 

Wilful,  arbitrary,  capricious  or  fraudulent  refusal  of 
the  vendor  to  sell  when  a  purchaser  is  produced,  does  not 
deprive  the  broker  of  his  right  to  commissions.17  "  The 
production  of  a  responsible  purchaser  on  terms  which  are 
satisfactory  to  the  employer  at  the  time  the  contract  of 
brokerage  is  entered  into,  is  sufficient  to  entitle  the 
broker  to  his  commissions,  and  he  cannot  be  deprived  of 
his  right  to  them  by  a  mere  change  of  mind  on  the  part 
of  the  vendor."  18 

But  where  there  is  no  time  fixed,  the  vendor,  before 
his  proposition  is  accepted,  may  change  his  mind  and 
withdraw  his  proposition  if  he  does  it  in  good  faith.19 

§  151.    Disclosure  of  Purchaser. 

The  broker  must  produce  the  purchaser  to  his  prin- 
cipal. The  principal  is  entitled  to  know  who  the  pro- 
posed purchaser  is  and  with  whom  he  is  expected  to  enter 
into  a  contract,  and  as  long  as  there  is  uncertainty  as  to 
the  purchaser  the  broker  cannot  claim  performance  of 
his  contract  and  demand  his  compensation.20  But  it  is 
held  in  Young  v.  Buhwedel,  119  Mo.  App.  242  (1906)  that 
the  production  by  the  broker  of  a  contract  of  purchase 
signed  by  the  purchaser  is  legally  equivalent  to  the  pro- 
duction of  the  purchaser  himself. 

The  true  identity  of  the  purchaser  may  be  sometimes 

i«  See  Boardman  v.  Hanks,   185  Mass.  555   (1904). 

r  ,«»>  *.  ..«  ,  .. 


l38s»8Gerd'ing  v.   Haskta,    141   N.   Y.   514    (1894). 


160  COMMISSIONS   AND    THEIR    RECOVERY. 

a  material  fact  which  ought  to  be  known  to  the  principal, 
since  such  knowledge  might  affect  his  action.21  ''Ob- 
viously a  broker  cannot  keep  his  customer  in  the  dark 
and  allow  him  (the  principal)  to  fall  into  the  trap  of 
agreeing  to  pay  another  broker,  or  of  taking  a  less  price 
for  the  property  in  the  belief  that  no  commissions  are  to 
be  paid,  and  then  recover  his  commission. ' ' 22 

Where  the  broker  misleads  his  principal  and  gives 
him  a  false  name  as  that  of  the  prospective  buyer,  the 
principal  is  not  liable  to  the  broker  for  commission  if 
he  sells,  either  directly  or  through  another  broker  to  the 
very  customer  who  was  in  fact  the  customer  of  the  broker, 
but  whose  real  identity  was  concealed.23 

§  152.    Waiver  of  Right  to  Disclosure  of  Purchaser. 

But  while  the  seller  is  entitled  to  know  who  the  pro- 
posed purchaser  is,  and  with  whom  he  is  expected  to 
enter  into  contract,  he  may  relinquish  that  right  by  waiv- 
ing the  production  of  the  intending  purchaser  and  the 
consequent  information.24  Thus  where  the  principal 
does  not  ask  for  it,  the  broker  need  not  disclose  the  name 
of  his  customer.25  And  where  the  broker  has  not  dis- 
closed the  name  of  the  proposed  buyer,  and  the  seller 
interposes  no  objection  thereto,  but  refuses  to  make  the 
sale  after  the  broker  notifies  him  that  a  purchaser  has 
been  procured,  he  (the  seller)  waives  the  right  to  the  de- 
fense that  the  broker  is  not  entitled  to  commissions  be- 
cause he  did  not  communicate  the  name  of  the  proposed 
purchaser.26 

On  the  other  hand,  "  an  agent  cannot  be  deprived  of 
his  commission  merely  because  the  actual  purchaser 

n  Veasey  v.  Carson,  177  Mass.  117  (1900),  (citing  Young  v.  Hughes,  32  N.  J.  Eq. 
372;  Pratt  v.  Patterson,  112  Penn.  St.  475). 

^Jungeblut  v.    Gindra,    134  App.    Div.   293,   204    (N.   Y.   1909). 

21  Simpson  v.   Smith,   36  Misc.   815    (N.   Y.    1902). 
28  Hovey   v.    Aaron,    133   Mo.    App.    583    (1908). 
88  Duclos  v.   Cunningham,    102  N.   Y.   678    (1886). 


AVAILABILITY    OF    PURCHASER.  161 

takes  title  in  another's  name."27  The  deed  to  the  pur- 
chaser is  admissible  in  evidence  to  show  who  the  pur- 
chaser really  was.28 

§  153.    Financial  Ability  of  Purchaser. 

The  rule  requires  that  the  proposed  purchaser  must 
not  only  be  ready  and  willing,  but  also  able  to  purchase, 
on  the  seller's  terms.29  By  this  is  meant  that  the  pro- 
posed purchaser  must  be  financially  able  to  make  the 
purchase.  Where  no  contract  results,  in  order  to  re- 
cover, the  broker  must  show  the  financial  ability  of  the 
proposed  purchaser.30 

In  Iselin  v.  Griffith,  62  Iowa  668  (1883),  the  owner 
sold  the  land  to  another  after  notice  of  a  sale  made  by  the 
broker.  The  court  said:  "  We  think  that,  in  order  to 
entitle  plaintiffs  to  recover,  something  more  than  a  mere 
offer  to  purchase  should  be  shown  by  them.  Such  an 
offer  could  be  made  by  one  without  means,  and  who  is  in 
no  condition  to  comply  with  the  terms  of  the  sale,  and 
against  whom  a  claim  for  damages  resulting  from  a  fail- 
ure to  perform  the  contract  of  purchase,  could  not  be 
enforced.  An  offer  from  such  an  one  ought  not  to  be 
considered  as  constituting  the  performance  of  plaintiffs' 
undertaking  to  negotiate  the  sale  of  the  land.  As  the 
pecuniary  responsibility  of  the  purchasers  was  or  ought 
to  have  been  known  to  plaintiffs,  and  as  upon  it  depended 
the  performance  of  their  contract  with  defendant,  the 
burden  rested  upon  them  to  show  it.  These  conclusions 
are  supported  by  Coleman's  Exrs.  v.  Mead,  13  Bush.  358, 
and  McGavock  v.  Woodlief,  20  How.  221.  Contra  see 
Cook  v.  Kroemeke,  4  Daly  268,  and  Hart  v.  Hoffman,  44 
How.  Pr.  168." 

27  Konner  v.   Anderson,   32  Misc.   511    (N.   Y.   1900),    (citing  Randrnp  v.   Schroeder, 
'22  Mise.   307   (N.   Y.    1898)  ). 

28  Myers   v.    Cohen,   4    Misc.    185    (N.   Y.    1893). 
»  Lunney    v.    Healey,    44    L.    R.    A.    619    (1898). 

aoCorbin  v.  M.  &  T.  Bank,  121  App.  Dlv.  744  (N.  Y.  1907).  But  see  McDennott 
v.  Mahoney,  115  S.  W.  38  (Iowa  1908). 


162  COMMISSIONS   AND    THEIE   RECOVERY. 

Where  no  contract  of  sale  was  entered  into  and  the 
sole  question  was  whether  the  broker  had  produced  a 
purchaser  who  was  able  to  purchase  on  the  defendant's 
terms,  and  one  of  the  terms  was  a  cash  payment  of  con- 
siderable amount,  the  broker  was  required  to  show  that 
the  proposed  purchaser  had  available  funds.  And  as- 
sets consisting  of  stock  in  business  and  claims  against 
third  parties  were  not  held  sufficient.31 

Where  an  informal  contract  is  agreed  upon,  and  the 
proposed  buyer  is  to  pay  $450  on  the  signing  of  the  for- 
mal contract,  and  a  large  amount  at  the  closing  of  title 32 
and  the  vendor  refuses  to  execute  the  formal  contract  as 
agreed,  the  question  of  the  financial  ability  of  the  pur- 
chaser, it  seems,  should  be  whether  he  was  financially 
able  to  pay  the  deposit  at  the  time  agreed,  not  whether 
he  was  then  able  to  pay  the  entire  purchase  price.33 

§  154.    When  Financial  Ability  of  Purchaser  Need  Not 
be  Shown. 

The  purchaser's  ability  is  generally  presumed  unless 
the  contrary  appear.34 

The  owner  cannot  avail  himself  of  the  objection  that 
the  customer  procured  by  the  broker  is  not  able  to  pay 
for  the  premises,  after  he  has  accepted  such  purchaser 
as  satisfactory  and  has  entered  into  an  enforceable  con- 
tract of  purchase  and  sale  with  him.35  Where  a  contract 
of  sale  is  actually  made,  the  broker,  to  recover  his  com- 
missions, need  not  show  the  financial  ability  of  the  pro- 
posed buyer.36  So  where  all  the  terms  of  the  sale  are 
agreed  upon  and  the  vendor  accepts  the  proposed  pur- 

«  Schnitzer   v.   Price,    122   App.    Div.   409    (N.   Y.    1907). 

82  See  §  364  infra  as  to  meaning  of  the  term  "closing  of  title." 

83  Levy   v.   Ruff,   4   Misc.    180    (N.   Y.    1893). 
"McFarland   v.    Lillard,   2  Ind.   App.    166    (1891). 

»  Alt  v.  Doscher,  102  App.  Div.  344  (N.  Y.  1905)  ;  Watkins  Co.  v.  Thetfor.l.  9i 
S.  W.  72  (Tex.  1906);  Parker  v.  Walker.  86  Tenn.  571  (1888);  Phinizy  v.  Bush.  120 
Ga.  486  (1907);  Glade  v.  Eastern  111.  Ming.  Co.,  107  S.  W.  1005  (Mo.  1908),  (citing 
Wright  v.  Brown,  68  Mo.  App.  577). 

*  Beckley   v.    Morton,    140   111.   App.    304    (1908). 


AVAILABILITY   OF   PURCHASES.  163 

chaser,  the  broker  need  not  show  the  financial  ability  of 
this  purchaser.37  Nor  need  he  show  it,  it  has  been  said, 
where  the  vendor  refuses  to  sell  for  reasons  other  than 
the  financial  inability  of  the  purchaser.38  Thus  where 
the  purchaser  stated  that  he  had  a  certified  check  to  pay 
on  account  of  the  purchase  price,  and  was  willing  to  make 
the  contract,  and  the  owner  refused  to  make  the  contract 
because  he  had  since  advanced  the  price,  an  actual  ex- 
hibition of  the  tender  of  the  check  was  held  not  neces- 
sary.39 

Financial  ability  of  the  purchaser  is  not  a  proper  sub- 
ject of  inquiry  where  the  contract  has  been  executed,  and 
no  question  is  raised  concerning  same  by  the  vendor,  and 
where  there  is  no  question  of  bad  faith  or  that  the  broker 
induced  the  vendor  to  execute  the  contract  by  represen- 
tations as  to  the  financial  ability  of  the  purchaser.40  Nor 
is  it  essential  to  show  the  financial  ability  of  the  pur- 
chasers if  the  agent  is  employed  to  effect  a  sale  on  speci- 
fied terms  to  designated  persons.41 

But  what  has  already  been  said  must  also  be  consid- 
ered from  another  viewpoint.  As  we  have  seen,42  there 
are  cases  which  hold  that  the  broker's  obligation  is  not 
completed  until  the  purchaser  produced  by  him  carries 
out  his  contract.  Where  such  rule  prevails,  the  force  of 
the  decisions  above  referred  to  is  necessarily  limited,  or 
fails  altogether.43 

And  ' '  it  is,  of  course,  possible  for  a  broker,  by  special 
contract,  to  make  his  compensation  contingent  upon  the 
actual  payment  of  the  purchase  price.  Thus,  where,  by 
special  contract,  a  broker's  commission  depends  upon 
fulfillment  by  the  purchaser  of  his  contract  to  purchase, 

"Brand  v.    Nagle.    122  App.   Div.  490    (N.   Y.    1907). 
w  McFarland  v.   Ullard,   2  Ind.  App.   166   (1891). 
»  Harrell  v.   Veith,    13   N.   Y.    St.   Rep.   738    (1888). 
"Fleet   v.    Barker,    120   App.    Div.   455    (N.    Y.    1907). 
«  Stoutenburgh    v.    Evans,    120    N.    W.    59    (Iowa    1909). 
42  §§    117-119   supra. 

48  See  Moore  v.  Irvin,  20  L.  R.  A.  (N.  S.)  1168,  and  notes;  s.  c.,  118  S.  W.  662 
(Ark.  1909). 


164  COMMISSIONS   AND   THEIE   RECOVERY. 

he  cannot  recover  his  commission  where  the  purchaser 
does  not  perform  because  of  financial  inability,  although, 
after  his  default,  the  contract  was  cancelled  by  mutual 
agreement  of  the  parties. ' ' 44 


§  155.    Burden  of  Proof  as  to  Financial  Ability  of  Pur- 
chaser. 

"  Whether  in  actions  generally  by  agents  to  recover 
commissions  for  procuring  purchasers,  where  there  has 
been  no  consummation  of  the  sale,  the  burden  is  upon  the 
agent  to  show  the  ability  of  the  proposed  purchaser  to 
pay  the  consideration,  or  upon  the  seller  to  show  the 
want  of  that  ability,  is  a  question  about  which  there  is  a 
conflict  of  authority.  Some  hold  that  solvency  and  abil- 
ity are  to  be  presumed;  others  maintain  the  opposite 
doctrine.  In  view  of  the  particular  facts  of  the  case 
(the  purchaser  had  been  accepted  without  condition 
or  inquiry),  we  deem  it  unnecessary  to  express  an  opinion 
upon  the  broad  question.  Whatever  doubt  there  may  be 
as  regards  the  general  question  above  stated,  we  are  of 
the  opinion  that  when  the  principal  accepts  the  purchaser 
without  question  of  his  ability  to  perform,  and  the  sale 
fails  of  consummation  of  his  own  fault  or  failure  to  make 
good  his  offer,  the  burden  is  upon  him,  in  order  to  defeat 
the  agent's  rights  to  compensation,  to  show  the  pur- 
chaser's want  of  ability.45  In  that  case,  where  the  facts 
were  quite  like  those  in  this,  the  court  said:  '  Upon  this 
question  the  authorities  are  conflicting,  but  we  think  the 
true  rule  is  this :  That  as  a  general  proposition,  a  broker 
who  has  been  employed  to  sell  is  not  entitled  to  recover 
his  commission  unless  he  shows  that  he  procured  a  per- 
son willing,  ready  and  able  to  purchase  upon  the  terms 

««  Moore  v.  Irvln,  20  L.  R.  A.  (N.  S.)  1172  (Ark.  1909)  where  other  authorities 
are  cited. 

«CitlDg  Davis  v.   Morgan,   96  Ga.  518,   520;  23  S.   E.  417. 


AVAILABILITY   OF   PUBCHASEE.  165 

prescribed  by  his  principal;  but  where  it  appears  that 
the  proposed  purchaser  was  accepted  by  the  principal, 
the  burden  is  upon  the  latter  to  show  that  the  purchaser 
was  not  able  to  comply  with  the  terms  of  the  con- 
tract."'46 

«  Dotson  v.  Milliken,  27  App.  D.  C.  515,  518  (1906),  (citing  Lockwood  T.  Halsey, 
41  Kans.  166,  169;  21  Pac.  98;  Fairly  v.  Wappoo  Mills,  44  S.  C.  227,  248;  29  L.  B. 
A.  215;  22  S.  E.  108).  See  also  §§  153,  154  supra. 


CHAPTER  XV. 
TRANSACTION  MUST  BE  COMPLETE. 

§  156.    General  Statement. 

The  broker  must  bring  about  a  completed  trans- 
action, which  requires  that  all  the  details  of  the  bargain 
must  be  agreed  upon.  (§§  157-160.) 

Procuring  a  person  who  merely  takes  an  option  on 
the  property  does  not  entitle  the  broker  to  commissions. 
(§  163.) 

Where  the  broker  fails  to  bring  the  customer  up  to 
the  specified  terms  and  abandons  the  negotiations,  he  is 
not  entitled  to  commissions  though  the  principal  subse- 
quently sells  to  the  same  person  at  the  price  fixed. 
(§  164.) 

§  157.    What  Constitutes  a  Completed  Transaction. 

The  broker  must  bring  about  a  completed  transac- 
tion.1 On  this  the  authorities  are  agreed.  They  differ, 
however,  on  the  question  as  to  what  constitutes  a  com- 
pleted transaction.  Some  authorities  hold  that  when  the 
broker  has  produced  a  purchaser  ready,  willing  and  able 
to  purchase  on  his  principal's  terms,  his  obligation  is 
performed.  Others  hold  that  the  broker  must  bring 
about  a  valid  enforceable  contract  of  sale.  The  subject 
has  already  been  presented  and  the  authorities  cited.2 

No  extended  argument  is  necessary  to  show  that  in 
those  jurisdictions  where  the  broker  is  required  to  bring 
about  an  enforceable  contract  of  sale,  he  has  not  brought 

1  Buxton  v.   Beal,  49  Minn.   230   (1892). 
3  §§    117-119   supra. 

166 


TRANSACTION    MUST   BE   COMPLETE.  167 

about  a  completed  transaction  until  the  contract  is  ac- 
tually executed.  This  chapter,  therefore,  deals  only  with 
the  question  as  to  what  constitutes  a  completed  transac- 
tion in  those  jurisdictions  where  the  broker  earns  his 
commissions  by  producing  a  purchaser  ready,  willing  and 
able  to  purchase  on  his  principal 's  terms. 

§  158.    General  Rule  as  to  Completeness  of  Transaction.8 

There  must  be  a  meeting  of  the  minds  of  both  buyer 
and  seller  on  all  the  terms  of  the  transaction.4 

Where  the  owner  gives  the  broker  the  price  and  par- 
ticular terms  upon  which  the  property  is  to  be  sold,  and 
the  owner  thereafter  capriciously  refuses  to  make  the 
sale  to  a  person  procured  by  the  broker,  able  and  willing 
to  purchase  on  those  terms,  the  broker  earns  his  commis- 
sion. But  where  the  terms  have  not  been  definitely  pre- 
scribed, the  broker  assumes  the  hazard  of  being  able  to 
find  a  person  whose  terms  are  so  satisfactory  to  the 
owner  that  a  definite  arrangement  might  be  made,  and 
in  respect  to  which  the  minds  of  the  parties  might,  as  a 
result,  meet,  and  his  commission  is  not  earned  until  their 
minds  do  so  meet.5 

§  159.    All  Details  of  Sale  Must  be  Agreed  Upon.6 

A  broker  is  not  entitled  to  commission  unless  he 
shows  that  the  parties  to  the  proposed  sale  reached  an 
agreement,  not  only  as  to  the  price  but  as  to  the  terms 
of  payment,  the  time  of  taking  title,  and  all  the  details 
incident  to  such  sale.7  Thus,  under  the  customary  con- 
tract of  brokerage,  a  broker  though  he  procures  a  pur- 

»  See  §  157  supra  as  to  scope  of  this  chapter. 

«  Rimyon  v.  Wilkinson.  57  N.  J.  L.  422  (1894)  ;  Rockwell  y.  Newton,  44  Conn. 
333  (1877).  See  §?  147,  148  supra. 

s  Forrester  v.  Price,  6  Misc.  308  (N.  Y.  1893);  Falrchlld  T.  Cunningham,  84  Minn. 
524  (1901). 

«  See  5   157  supra  as  to  scope  of  this  chapter. 

•>  Peace  v.  Ross,  123  App.  Dlr.  611  (N.  Y.  1908)  ;  Caston  T.  Qulmby.  178  Mass. 
153  (1901). 


168  COMMISSIONS   AND   THEIR   RECOVERY. 

chaser  who  is  willing  and  able  to  pay  the  price  asked, 
is  not  entitled  to  commissions  if  the  minds  of  the  parties 
do  not  meet  in  a  contract,  the  details  of  which  are  worked 
out  and  understood  between  them,  the  sale  not  being 
consummated  by  reason  of  a  lack  of  agreement  as  to  its 
terms  and  conditions,  as  for  instance,  a  failure  to  agree 
on  a  time  when  the  title  should  be  closed,8  or  the  refusal 
of  the  vendor  to  obligate  himself  to  dig  a  well.9 

§  160.    Effect  of  Special  Conditions  on  Completeness  of 
Transaction.10 

Where  the  purchaser's  assent  to  buy  is  qualified  by 
a  statement  that  he  accepts  the  vendor's  offer  and  has 
forwarded  contract  to  be  signed,  it  is  really  an  accept- 
ance according  to  the  contents  of  such  contract,  but  un- 
less the  contract  is  satisfactory,  or  complies  with  the 
vendor's  proposition,  no  completed  transaction  can  be 
said  to  have  resulted.11 

Where  the  broker  has  brought  a  purchaser  ready  and 
willing  to  purchase  on  the  owner's  terms,  and  an  infor- 
mal agreement  is  reached,  but  the  vendor  refuses  later  to 
make  a  formal  contract,  the  fact  that  the  broker  subse- 
quently endeavors  to  have  the  parties  agree  on  new  terms 
does  not  amount  to  a  waiver  of  his  right  to  commis- 
sions.12 

And  in  a  Nebraska  case,  it  was  said  that  "  when  the 
price  of  property  and  terms  of  payment  are  fixed  by  the 
seller,  and  the  broker's  engagement  is  to  procure  a  pur- 
chaser at  that  price  and  upon  those  terms,  if,  upon  the 
procurement  of  the  broker,  a  purchaser  is  produced  with 
whom  the  seller  himself  negotiates  and  effects  a  sale, 
although  the  terms  may  be  changed  and  even  the  sale 

"Haase  v.  S-hneider,  112  App.  Div.  336  (N.  Y.  1906).  See  §  364  infra  as  to 
meaning  of  "closing  of  title." 

•Smith   v.  Allen,    101    Iowa  608    (1897). 

10  See  §   157  supra  as  to  scope  of  this   chapter. 

URunyon  v.  Wilkinson,  57  N.  J.  L.  423   (1894).     See  also  §  163  infra. 

"Levy    v.    Ruff,    4    Misc.    180    (N.    Y.    1893). 


TRANSACTION    MUST   BE    COMPLETE.  169 

itself  finally  abandoned,  he  is  entitled  to  his  commis- 
sion." 13 

So  where  the  broker  was  authorized  to  sell,  nothing 
being  said  about  the  character  of  the  deed  to  be  given, 
and  the  owner  refuses  to  contract  only  because  the  pur- 
chaser produced  by  the  broker  insists  on  a  warranty 
deed,  which  the  owner  declines  to  give  on  account  of  a 
supposed  defect  in  part  of  the  title,  the  broker  cannot 
recover  commissions,  since  it  cannot  be  said  that  the 
minds  of  the  parties  met.14  And  it  was  held  in  Guth- 
mann  v.  Meyer,  31  Misc.  810  (N.  Y.  1900)  that  a  broker 
is  not  entitled  to  commission  where  his  principal  and  the 
proposed  purchaser  failed  to  consummate  a  sale  because 
of  a  dispute  over  taxes. 

But  where  the  broker  produces  a  purchaser  ready, 
able  and  willing  to  purchase,  and  the  only  objection  of 
the  owner  is  that  the  purchaser's  acceptance  did  not  pro- 
vide for  the  same  terms  of  interest  required  by  the  owner, 
and  the  broker  offered  to  have  the  acceptance  complied 
with  and  to  pay  the  difference  then  and  there,  the  broker 
was  held  entitled  to  his  commissions,  the  court  deeming 
the  owner's  objection  too  trivial.15  And  where  an  owner 
listed  his  property  with  two  brokers  to  one  of  whom  he 
had  given  a  fixed  price  ($12,400),  and  a  buyer  not  know- 
ing this,  proposed  to  buy  the  property  from  the  other 
broker  at  a  higher  price  ($13,000),  but  later  discovering 
the  facts,  negotiated  with  the  first  broker  at  $12,400,  and 
the  owner,  though  duly  notified  thereof,  refused  to  ac- 
cept, preferring  the  larger  offer,  it  was  held  that  the 
broker  with  the  $12,400  offer  had  earned  his  commis- 
sion.16 

And  where  a  broker  procures  a  customer  to  whom  his 
employer  agrees  to  sell,  he  is  entitled  to  recover  commis- 

u  Potvin  Y.   Curran.    13   Nebr.   302    (1882). 

"Hess  v.   Bloch.   56  Misc.   480   (N.   Y.    1907).     See  also  §   133  supra. 

™  Riker  v.   Post.   125  App.   Div.  607   (N.Y.   1908). 

WLovett  v.  Clench,  115  App.   Dlv.  C35   (N.   Y.  1906). 


170  COMMISSIONS   AND   THEIR   RECOVERY. 

sions  notwithstanding  that  thereafter  the  employer  re- 
fuses to  enter  into  a  formal  contract  of  sale  because  a 
building  upon  the  land  intended  to  be  conveyed  en- 
croaches upon  adjoining  land.17 

§  161.    Effect  of  Failure  to  Contract. 

As  stated  in  §  157,  those  jurisdictions  which  require 
an  executed  contract  of  sale  before  the  broker  is  entitled 
to  commissions  are  expressly  excluded  from  the  con- 
siderations of  this  chapter.  It  may  therefore  be  stated 
broadly  that  it  is  sufficient  if  the  broker  duly  employed 
has  found  a  purchaser  ready,  willing  and  able  to  enter 
into  such  a  contract,  or  to  purchase  on  his  employer's 
terms.18  It  is  not  necessary  that  a  written  contract  of 
sale  should  have  been  entered  into  between  the  parties 
in  order  to  entitle  the  broker  to  his  commissions,19  nor 
that  a  conveyance  of  the  property  intrusted  to  him  for 
sale  should  actually  be  consummated  between  his  em- 
ployer and  customer.20  So  long  as  an  agreement  has 
been  reached,  though  not  reduced  to  writing,  the  owner 
is  liable  for  broker's  commissions  even  though  he  recedes 
from  the  agreement  before  it  has  been  reduced  to 
writing.21 

But  the  broker  may  obligate  himself  not  only  to  find 
a  purchaser  but  to  procure  a  contract  of  sale  in  writing, 
and  when  this  is  the  arrangement  he  can  claim  no  com- 
mission until  such  written  agreement  to  purchase  is  fur- 
nished.22 

In  Norman  v.  Reuther,  25  Misc.  161  (N.  Y.  1898),  it 

"Cusack  v.  Aikman.  83  App.  Div.  579   (N.  Y.  1904). 

18  See  §  96  supra;  also  Duclos  v.  Cunningham,  102  N.  Y.  678  (1896);  Lunney  v. 
Healey,  44  L.  R.  A.  601  (1898). 

"McFarland  v.  Lillard,  2  Ind.  App.  163  (1891);  Vanghan  v.  McCarthy,  59  Minn. 
202  (1894);  Millan  v.  Porter,  31  Mo.  App.  576  (1888),  (citing  Keys  v.  Johnson,  68 
Pa.  St.  43;  Tyler  v.  Parr,  52  Mo.  249,  and  other  Missouri  cases). 

20  Martin   v.    Bliss,    57   Hun   157    (N.   Y.    1890). 

n  Levy  v.  Ruff,  4  Misc.  180  (N.  Y.  1893),  (citing  Barnard  v.  Monnot,  3  Keyes 
(N.  Y.)  203;  Krahner  v.  Heilman.  30  N.  TL.  St.  Rep.  434;  Kalley  v.  Baker.  132  N.  Y. 
1;  Gilder  v.  Davis,  137  N.  Y.  506). 

«McFarland   v.   Lillard,   2  Ind.   App.    165    (1891). 


TRANSACTION    MUST   BE   COMPLETE.  171 

was  held  in  the  case  of  an  exchange,  that  the  broker  must 
show  that  he  had  procured  a  valid  contract  for  exchange. 

§  162.    Modification  of  Terms. 

Where  a  broker  has  procured  the  making  of  a  con- 
tract, he  is  entitled  to  commission,  although  the  parties 
subsequently  agree  to  a  modification  thereof  without  the 
intervention  of  the  broker.23  And  where  the  parties  are 
brought  into  communication  by  the  broker's  agency,  the 
principal,  by  negotiating  with  the  purchaser  on  different 
terms,  waives  the  terms  given  to  the  broker.24 

§  163.    Options  and  "  Alternative  "  Contracts. 

We  have  already  seen,25  that  a  broker  is  not  entitled 
to  commission  for  procuring  a  person  who  merely  takes 
an  option  to  purchase.  A  distinction  must,  however,  be 
made  between  a  mere  option  to  purchase,  the  bringing 
about  of  which  gives  the  broker  no  right  to  commissions, 
and  a  contract  entered  into  between  the  seller  and  the 
purchaser  which  provides  for  liquidated  damages  in  case 
of  non-performance.  An  option  is  an  exclusive  privilege 
to  buy.  It  binds  the  one  who  makes  it,  but  not  the  one 
to  whom  it  is  made,  unless  he  accepts,  when  it  becomes 
binding  upon  both.26  Acceptance  of  the  option  does  not 
mean  the  mere  receiving  of  the  agreement,  but  means  an 
acceptance  of  the  offer  contained  in  the  option  according 
to  its  terms.27  On  the  other  hand,  a  contract  of  sale 
which  provides  for  liquidated  damages  in  case  of  the 
default  or  non-performance  of  either  party,  is  none  the 
less  a  contract  of  sale  and  not  an  option.  Parties  are  not 
released  from  performing  their  agreement  by  inserting 

a. Tones   v.   Henry.    15  Misc.    151    (N.   Y.    1895). 

2*  Davis  v.  Cassette,  30  111.  App.  44,  45   (1888).     See  also  §5  134.   135  tvpra. 

28  §  149  supra. 

"Benedict  v.    Plncus.   191   N.   Y.   382.   383    (1908). 

«  Pomeroy  v.   Newell,   117  App.   Div.  802   (N.   Y.  1907). 


172  COMMISSIONS   AND    THEIK   KECOVERY. 

a  penalty  for  non-performance.  Specific  performance 
may,  nevertheless,  be  had.28  ''The  question  always  is, 
what  is  the  agreement?  Is  it  that  one  certain  thing  shall 
be  done,  with  a  penalty  added  to  secure  its  performance, 
or  is  it  that  one  of  two  things  shall  be  done,  namely,  the 
performance  of  the  act,  or  the  payment  of  the  sum  of 
money?  If  the  former,  the  fact  of  the  penalty  being  an- 
nexed will  not  prevent  equity  from  enforcing  perform- 
ance of  the  very  thing  and  thus  carrying  out  the  inten- 
tion of  the  parties;  if  the  latter,  the  contract  is  satisfied 
by  the  payment  of  a  sum  of  money  and  there  is  no  ground 
for  equitable  procedure  against  the  party  having  the 
election.  Stipulating  the  damages  and  promising  to  pay 
them  in  case  of  default  in  the  performance  of  an  other- 
wise absolute  undertaking,  does  not  constitute  an  alter- 
native contract. ' ' 29 

The  contract  for  the  sale  of  real  estate  may  provide 
for  the  payment  of  a  sum  of  money  as  liquidated  damages 
by  the  party  failing  to  perform,  and  thus  the  contract 
may  in  a  certain  sense  be  optional  with  either  party,  yet 
if  the  employer  signs  or  approves  the  contract,  there  is 
no  reason  to  doubt  that  in  such  a  case,  although  in  the 
end  the  purchaser  may  not  take  a  conveyance  of  the  real 
estate,  preferring  to  pay  the  liquidated  damages,  the 
broker  has  earned  his  commissions.30  If  in  such  a  case 
the  employer  wishes  to  be  exempt  from  the  payment  of 
commissions  or  to  confine  the  commissions  to  the  amount 
of  the  liquidated  damages  paid  in  lieu  of  performance, 
he  should  stipulate  for  such  exemption  in  the  contract 
with  his  broker.31 

Where,   however,   a   contract  was  procured  by  the 
broker,  and  approved  and  confirmed  by  the  principal  pre- 
28  Phoenix  Ins.  Co.   v.  Continental  Ins.   Co..   14  Abb.   Pr.   N.   S.  266   (N.  Y.   1873)  ; 
Zimmermann  v.   Herzog.    13  App.   Div.   213    (N.   Y.   1897). 
29  Crane  v.    Peer,    43   N.   J.    Eq.    558,    563. 

»  But  see  Lawrence  v.  Rhodes,  188  111.  96  (1900);  Moss  v.  Wren,  118  S.  W.  149 
(Tex.  1908). 

*i  Gilder  v.  Davis,   137  N.   Y.   506   (1893). 


TRANSACTION   MUST   BE   COMPLETE.  173 

scribing  that  a  certain  amount  was  to  be  paid  down  on 
account  of  the  purchase  price,  which  was  done,  and  the 
balance  was  to  be  paid  as  soon  as  a  company  to  be  organ- 
ized by  the  purchaser  was  formed  and  enough  stock  sub- 
scribed to  meet  the  payment,  and  that  in  event  of  the 
failure  of  the  purchaser  to  organize  the  company  and  ob- 
tain enough  subscriptions  to  pay  the  balance  of  the  pur- 
chase price  within  a  specified  time,  the  payment  on  ac- 
count of  the  purchase  price  should  be  forfeited  to  the 
seller,  and  it  was  so  forfeited,  the  New  York  Court  of 
Appeals  thought  it  a  just  view  that  the  broker  should  at 
least  receive  his  commissions  upon  the  sum  paid  and  for- 
feited by  the  purchaser.  And  this  is  so,  notwithstanding 
that  the  seller  informed  the  broker  that  he  should  not  be 
entitled  to  commissions  until  the  final  purchase  money 
was  paid  and  the  broker  expressed  his  satisfaction  with 
the  arrangement.  The  Court  in  fact  went  even  further, 
stating  that  while  it  was  not  necessary  to  be  determined 
it  was  by  no  means  clear  that  the  broker  was  not  entitled 
to  his  full  commissions.32 

But  a  broker  is  not  entitled  to  commissions  upon  ef- 
fecting a  provisional  agreement  for  a  sale,33  which  fails 
because  the  purchaser  avails  himself  of  a  reserved  privi- 
lege to  recede  from  the  purchase  upon  the  happening  of 
a  specified  contingency  not  dependent  upon  the  action  of 
the  vendor.34 

§  164.    Abandonment  by  Broker. 

Where  a  broker  opens  negotiations,  but,  failing  to 
bring  the  customer  to  the  specified  terms,  abandons  them, 
and  the  employer  subsequently  sells  to  the  same  person 
at  the  price  fixed,  he  is  not  liable  to  the  broker  for  com- 

M  Glider  v.   Davis,   137  N.   Y.   506   (1893). 
M  Barber  v.   Hildebrand,   42   Nebr.   405    (1894). 

»*  Conflict  v.   Cowdrey,    139   N.   Y.   273    (1893).     And  see  Lawrence  Y.   Rhodes,    II 
111.  96   (1900)  ;  Block  v.  Ryan,  4  App.  D.  C.  283   (1894). 


174  COMMISSIONS   AND   THEIR   RECOVERY. 

missions.35  "  The  fact  that  a  sale  or  exchange  of  the 
property  is  finally  brought  about  by  the  efforts  of  the 
principal  or  another  broker,  with  a  person  with  whom 
the  first  broker  had  previously  negotiated  without  suc- 
cess, will  not  furnish  a  legal  basis  for  a  claim  for  commis- 
sions by  the  first  broker,  especially  when  it  appears  that 
the  first  broker  has  for  a  long  time  ceased  negotiations 
with  the  purchaser,  and  abandoned  all  efforts  to  induce 
him  to  take  the  property  on  the  proposed  terms. ' ' 36 
Abandonment  by  the  broker  is  matter  of  defense.37 

*  Markus   v.    Kenneally,    19   Misc.    517    (N.   Y.    1897)  ;    Moore  v.    Cresap,    109   Iowa 
749    (1899)  ;    Singer   v.    Hutchinson,    61   111.    App.    308    (1895).     See   also   Davis    v.    Cas- 
sette, 30  111.  App.   45    (1888). 

»•  Davis  v.  Cassette,  30  111.  App.  45  (1888),  (citing  Lipe  v.  Ludewick,  14  111. 
App.  372;  Sibbald  v.  Bethlehem  Iron  Works,  83  N.  Y.  378).  See  also  §§  97,  98  supra 
and  237  infra. 

*  Moore  v.  Boehm,  45  Misc.  622   (N.  Y.   1904).     See  also  §  336  infra. 


CHAPTER   XVI. 
FAILURE  OF  PRINCIPAL  TO  COMPLETE. 

§  165.    General  Statement. 

If,  after  the  broker  performs  his  obligation,  the  seller 
is  unable  to  consummate  the  sale,  or  refuses  to  do  so,  the 
broker  is  nevertheless  entitled  to  his  commissions. 
(§§  166-170.) 

§  166.    The  Broker's  Obligation. 

Here,  as  in  the  preceding  chapter,  it  must  be  kept  in 
mind  that  there  is  a  conflict  in  the  decisions  as  to  what 
amounts  to  a  performance  of  the  broker's  obligation. 
Briefly,  the  difference  is  this, — some  cases  hold  that  the 
broker  must  procure  an  enforceable  contract  of  sale  be- 
fore he  has  earned  his  commissions,  while  others  hold 
that  the  broker  has  earned  his  commission  when  he  pro- 
duces a  purchaser  ready,  willing  and  able  to  purchase  on 
his  principal's  terms.  The  latter  may  be  regarded  as 
the  prevailing  rule. 

Some  of  the  cases  even  go  so  far  as  to  hold  that  the 
broker  is  not  entitled  to  his  commissions  unless  the  sale 
is  actually  accomplished  by  the  delivery  of  the  deed  of 
the  land  from  the  vendor  to  the  vendee  and  the  payment 
of  the  purchase  money  by  the  latter,  or  unless  it  is 
proven  that  the  sale  is  prevented  by  the  fault  of  the 
vendor.1 

These  conflicting  views  are  thus  briefly  referred  to  in 
order  that  the  statements  of  the  present  chapter  may  be 

*  See  §§   117-119  supra,  and  footnotes  thereto. 

175 


176  COMMISSIONS   AND   THEIR   RECOVERY. 

considered  accordingly,  and  so  that  the  authorities  given 
may  not  be  confused  and  the  attempt  he  made  to  apply 
them  in  jurisdictions  where  the  prevalence  of  one  or  the 
other  of  the  rules  set  forth  might  make  these  authorities 
inapplicable. 

§  167.    General  Rule  as  to  Failure  of  Principal  to  Com- 
plete.2 

If,  after  the  broker  produces  a  purchaser  ready  and 
willing  to  purchase  the  property  upon  the  terms  fixed  by 
the  seller,  the  seller  is  unable  to  consummate  the  contract 
or  refuses  to  do  so,  the  broker  is  nevertheless  entitled  to 
his  commissions.3  The  broker's  right  to  commission  is 
not  to  be  defeated  by  any  default  of  the  principal.4  * '  If 
defendants  (the  owners)  employed  plaintiffs  (the  bro- 
kers) to  find  a  purchaser  for  this  property,  the  compen- 
sation was  earned  when  they  produced  the  purchaser 
upon  the  prescribed  terms,  and  the  inability  of  defend- 
ants to  convey  was  an  independent  matter,  for  which 
they,  and  not  plaintiffs,  were  responsible.  The  cases  are 
uniform  in  this  respect. ' ' 5 

"  The  just  and  well-settled  rule  of  law  requires  that 
the  agent  shall  be  paid  his  compensation  when  he  pro- 
cures a  purchaser  who  is  acceptable  to  the  principal, 
and  ready,  able  and  willing  to  buy  on  the  agreed  terms, 
though  in  fact  the  sale  be  not  ultimately  consummated, 
provided  its  consummation  is  prevented  by  the  fault,  re- 
fusal or  defective  title  of  the  principal. ' ' 6 

a  See  §  166  supra  as  to  scope  of  chapter. 

» Mooney  v.  Elder,  56  N.  Y.  238  (1874);  Brackenridge  v.  Claridge,  43  L.  R.  A. 
593  (1898)  ;  Ayres  v.  Thomas,  116  Cal.  143  (1897)  ;  McDermott  v.  Mahoney,  115  N.  W. 
37  (Iowa  1908)  ;  King  Powder  Co.  v.  Dillon,  96  Pac.  441  (Colo.  1908). 

*  Ryer  v.   Tnrkel,   70  Atl.   72    (N.  J.    1908). 

»  McLaughlln  v.  Wheeler,  1  S.  D.  521  (1891),  (citing  Hamlin  Y.  Schulte,  34  Minn. 
534 ;  27  N.  W.  Rep.  301  ;  Mooney  v.  Elder,  56  N.  Y.  238 ;  Hannon  v.  Moran,  71  Mich. 
261;  38  N.  W.  Rep.  909). 

8  Cheatham  v.  Yarbrough,  90  Term.  79  (1891).  (citing  Mech.  on  Agency.  §§  966, 
967;  2  Am.  &  Eng.  Ency.  of  Law,  578,  581;  2  Add.  on  Contracts  (Morg.  Ed.),  §  931; 
McGavock  v.  Woodlief,  20  How.  (U.  S.)  221;  Koch  T.  Emmerling,  22  How.  (U.  S.) 
69;  Frazer  v.  Wyckoff.  63  N.  Y.  448;  Cook  v.  Fish.  12  Gray  493;  88  Ind.  104,  (s.  c., 
45  Am.  R.  447);  57  Cal.  224;  31  Md.  270;  Gilchrist  v.  Clarke,  2  Pickle  585;  Parker 


FAILURE    OF    PRINCIPAL    TO    COMPLETE.  177 

That  the  seller's  wife  refused  to  consent  to  the  ar- 
rangement cannot  deprive  the  broker  of  commissions,  if 
the  general  requisites  of  an  earned  commission  exist.7 
And  when  the  broker  produces  a  purchaser  able  and  will- 
ing to  perform,  who  is  accepted  by  the  seller,  the  seller 
cannot  escape  payment  of  the  commission  by  thereafter 
declaring  the  deal  off.8 

And  it  has  been  said  that  where  no  sale  is  actually 
consummated,  the  broker  must  either  have  procured  a 
valid  obligation  to  buy,  or  have  brought  the  proposed 
purchaser  and  the  vendor  together,  so  that  a  contract  of 
sale  might  have  been  entered  into  if  the  latter  so  elected.9 

§  168.    Defective  Title  as  Cause  of  Failure.10 

When  the  broker  procures  a  party  who  contracts  with 
his  principal,  it  is  no  answer  to  the  broker's  claim  for 
commissions  that  the  principal  is  unable  to  make  title,11 
unless  the  broker  was  apprised  of  the  defective  title  and 
undertook,  with  such  knowledge,  to  find  a  purchaser.12 
Where  there  is  a  defect  in  the  vendor's  title  which  is 
known  to  the  broker,  and  he  assures  the  vendor  that  the 
purchaser  will  take  the  property  notwithstanding,  he  is 
not  entitled  to  commissions  when  the  purchaser  later  re- 
fuses to  take  the  property  on  account  of  such  defects, 
these  not  having  been  brought  to  his  attention.13 

"  The  law  is  well  settled,"  says  the  court  in  Gerhart 

v.  Walker,  2  Pickle  569,  and  dissenting  opinion  in  the  same  case.  573).     See  also  Dotson 

v.    Milliken.   27   App.    D.    C.    at   514    (19O6).    (citing   Koch    v.    Emmerling.    . 

16   L.    Ed.   202;   McGavock  v.  Woodlief.   20   How.   221;    15  L.    Ed.   884;    Bryan   v.   Abert. 

3  App.  D.  C.  180.   181  ;  Cheatham  v.  Yarbrough,  90  Tonn.  77,  78  ;  15  S. W.   1 

burn  v.  Bradley.   169  Mass.  86.  SS :  47  X.   E.   B12:   Holden  v.   Stark*.   159  Mass.  o< 

Am.    St.    Rep.    451;    34    N.    E.    1069;    Knapp   v.    Wallace.    41    N.    Y.    47.;    McFarland   T. 

Lilian!.  2  Ind.  App.   160,   166;  50  Am.  St.  Rep.  234;  28  X.  E.  229). 

7  r,nMI>erff  v.  Gelles.  3:?  Misc.  793  (X.  Y.  1901);  Branch  v.  Moore,  105  8.  W. 
1180  (Ark.  1907);  Pur.ly  v.  Wilson.  HIS  S.  W.  1124  (Mo.  190S). 

s  Miller  v.   Riirtli.   35   Misc.   372    (X.   Y.    1901).     See  also  5   150  *upra. 

»  Flynn  v.   Jordal.    124   Town  4."S    (19O4). 

i°  See   §    100    supra   ns    to    soo|K>   of   chapter. 

»  Kmipi.  v.  wnlla.-...  41  X.  Y.  477  (1SOO):  Parker  v.  Walker.  80  Tenn.  5 
(188S>  :  Tacket t  v.  PmvU-y.  130  111.  App.  99  (1906)  ;  Gillespie  v.  Dick,  111  S.  W.  6< 
(Tex.  190S)  ;  Phinizy  v.  Rush.  129  Ga.  486  (1907). 

12  Parker  v.   Walker,  supra. 

18  Hynes   v.   Brettelle,   70   Mo.   App.   344    (1897). 


178  COMMISSIONS   AND   THEIR   RECOVERY. 

v.  Peck,  42  Mo.  App.  651  (1890),  "  that  when  the  owner 
of  land  employs  a  real  estate  agent  to  negotiate  a  sale 
only,  it  is  always  implied  that  the  owner  has  a  good  title 
to  the  land.  The  agent,  by  his  agreement  to  negotiate  a 
sale,  assumes  no  obligation  in  reference  to  the  title  unless 
it  was  made  a  part  of  his  duty  to  have  the  title  examined 
before  attempting  to  effect  a  sale.  Therefore,  in  such  a 
case,  if  the  agent  finds  and  produces  a  purchaser,  ready 
and  willing  to  buy  according  to  the  owner's  terms,  or  if 
he  procures  a  valid  contract  from  a  solvent  buyer  and  the 
sale  is  not  effected  in  consequence  of  a  defect  or  apparent 
defect  in  the  title,  and  the  owner  refuses  or  declines  to 
take  any  steps  to  remove  the  defect  or  cloud,  or  to  pro- 
duce to  the  purchaser  evidence  that  the  title  is  not  in  fact 
faulty,  then  the  agent  is  entitled  to  his  commissions  the 
same  as  if  he  had  consummated  the  sale. ' ' 

And  where  the  broker  brings  about  an  exchange,  the 
party  employing  him  cannot  resist  a  claim  for  commis- 
sion on  the  ground  that  the  title  of  the  other  party  to  the 
exchange  is  defective  and  he  is  therefore  unable  to  per- 
form the  contract.14 

In  some  of  the  states,  contracts  of  sale  provide  that 
if  the  purchaser  finds  any  defects  in  the  title  the  vendor 
shall  have  a  specified  time  to  remedy  them,  if  that  can  be 
done.15 

§  169.    Special  Agreements  as  to  Title.16 

The  owner  of  property  may  engage  the  broker  under 
such  an  arrangement  as  to  relieve  himself  from  liability 
for  commissions  in  case  his  title  is  defective,  or  in  case 
the  purchaser  refuses  or  fails  to  carry  out  the  contract,17 
but  if  the  broker  is  employed  to  find  a  purchaser  without 

14  Kalley  v.   Baker,    132   N.   Y.   1    (1892).     See  also  "Commissions  on  Exchanges," 
Ch.  XVIII  infra. 

15  See  the  various  forms  of  contracts  of  sale  in  Ch.  XXXIX,  infra. 
14  See  §  166  supra  as  to  scope  of  chapter. 

"Flower  T.  Davidson,  44  Minn.  49  (1890). 


FAILURE   OF   PRINCIPAL   TO   COMPLETE.  179 

any  statement  by  the  principal  with  respect  to  his  title, 
and  the  broker  has  no  personal  knowledge  of  its  char- 
acter, the  broker  has  a  right  to  assume  that  the  title  is 
unobjectionable  and  to  negotiate  a  sale  upon  that  assump- 
tion.18 

If  the  principal  reveals  to  the  broker  the  real  state  of 
his  title,  and  it  is  agreed  that  the  broker  shall  not  be  paid 
commissions  unless  he  finds  a  purchaser  who  wil'  take 
such  title  as  the  principal  can  make,  the  broker  cannot 
recover  unless  he  complies  with  this  requirement. 

The  opinions  of  lawyers,  conveyancers  or  title  guar- 
antee companies  on  the  marketability  of  a  title  are  not 
admissible.19  This  is  because  the  marketability  of  the 
title  is  a  question  of  law  for  the  court  to  determine.  But 
lawyers '  opinions  are  admissible  on  the  validity  of  a  title 
to  property  located  in  another  state.20  This  is  so,  because 
what  the  law  is  in  another  state  is  regarded  as  a  question 
of  fact  upon  which  the  court  must  have  evidence  before  it 
may  make  a  determination. 

§  170.    Special  Causes  of  Failure.21 

When  a  broker,  duly  employed,  procures  a  customer 
to  whom  his  employer  agrees  to  sell,  he  is  entitled  to  re- 
cover commissions,  notwithstanding  the  fact  that  there- 
after the  employer  refuses  to  enter  into  a  formal  contract 
of  sale  because  a  building  upon  the  land  intended  to  be 
conveyed  encroaches  upon  adjoining  land.22 

Also  when  the  broker  produces  a  purchaser  at  the 
price  asked  by  the  owner,  he  is  entitled  to  commissions 
even  though  a  contract  of  sale  is  not  entered  into,  this 
failure  resulting  from  the  refusal  of  the  owner  to  sign 

w  Cheatham  v.  Yarbrongh,   90  Tenn.  77   (1891). 

»  Moser  v.  Cochrane,  107  N.  Y.  35  (1887);  Hess  Y.  Eggers,  37  Misc.  846  (N.  Y. 
1902).  (citing  Galling  Y.  Central  8.  V.,  67  App.  Div.  60  (N.  Y.  1902)  ). 

»  Barber  v.   Hlldebrand,  42  Nebr.  407   (1894). 

«*  See  §  166  supra  as  to  scope  of  chapter. 

**  Cusack  v.  Aikman,  93  App.  Dlv.  579  (N.  Y.  1904) ;  Brackenrldge  Y.  Clarldge. 
43  L.  B.  A.  595  (1898). 


180  COMMISSIONS    AND    THEIR    RECOVERY. 

unless  a  provision  were  inserted  providing  for  the  pay- 
ment of  a  forfeiture  in  case  he  could  not  carry  out  the 
contract,23  or  resulting  from  the  owner's  refusal  to 
sell.24  Nor  can  the  broker's  claim  be  defeated  by  the 
whimsical  or  unreasonable  refusal  of  the  seller  to  comply 
with  his  contract.25 

The  rule  that  where  a  party  gives  a  reason  for  his 
conduct  and  decision,  he  cannot  after  litigation  has  been 
begun,  change  his  ground  and  put  his  conduct  on  another 
and  a  different  ground,  applies  only  to  defects  in  form 
and  matters  of  detail, — objections  which  a  party  could 
easily,  and,  it  is  to  be  presumed,  would  have  removed 
had  they  been  objected  to,  so  that  an  after  insistence  upon 
them  is  an  injustice,  they  not  being  of  the  substance  of 
the  contract.  Therefore,  when  a  principal  did  not  put 
his  refusal  to  accept  an  offer  upon  the  ground  that  it  was 
not  in  accordancewith  the  terms  he  had  given  the  broker, 
he  may  still  insist  that  the  broker  did  not  prove  an  offer 
in  accordance  with  the  terms  given  him.26 

zsMcQuillen   v.   Carpenter,    72  App.   Div.   595    (N.   Y.    1902). 

24  Caruthers  v.  Reesor,   134  111.  App.  370   (1907). 

*  Crockett  v.  Grayson.  98  Va.  357  (1900),  (citing  McGavock  v.  Woodlief,  20  How. 
221;  Koch  v.  Emmerling,  22  How.  69;  Tombs  v.  Alexander,  101  Mass.  255).  See  also 
§  150  supra. 

28  Rand  v.  Cronkrite,  64  111.  App.  223,  224  (1896).  See  also  §  193  infra. 


CHAPTER   XVII. 
FAILURE  OF  CUSTOMER  TO  COMPLETE. 

§  171.    General  Statement. 

When  the  contract  of  sale  is  executed,  the  broker  has 
earned  his  commission  (§  172),  except  in  a  few  jurisdic- 
tions where  the  performance  of  the  contract  is  held 
essential  to  entitle  the  broker  to  commissions  (see 
§§  117-119  supra),  or  where  the  broker  has  made  a  valid 
and  binding  agreement  to  some  other  arrangement. 
(See  §§  227-235  infra.) 

The  authorities  are  quite  unanimous  that  the  right  of 
the  broker  to  his  commissions  does  not  depend  upon  the 
performance  of  the  contract  by  the  purchaser.  (§  172.) 

But  where  the  purchaser  abandons  the  broker  or  re- 
fuses to  deal  through  him,  he  is  not  entitled  to  commis- 
sions. (§  173.) 

Whether  the  broker  is  entitled  to  commissions  where 
the  sale  is  not  completed,  but  would  have  been  completed 
but  for  the  misrepresentations  of  the  vendor,  quere. 
(§  174.) 

§  172.    General  Rule  as  to  Failure  of  Customer. 

1 '  The  general  rule  is  that  when  a  broker  employed  to 
negotiate  a  sale  of  real  estate  brings  to  his  employer  a 
responsible  purchaser  willing  to  buy  upon  the  terms  pre- 
scribed, he  has  earned  his  commissions.1  Where  the  con- 

>  But  see  §§  117-119,  157,   166  supra. 

181 


182  COMMISSIONS  AND   THEIK   RECOVERY. 

tract  of  sale  is  executed  between  the  employer  and  the 
purchaser,  the  right  of  the  broker  to  his  commissions  does 
not  depend  upon  the  performance  of  the  contract  by  the 
purchaser.2  If  from  a  defect  in  the  title  of  the  vendor, 
or  from  a  refusal  to  consummate  the  contract  on  the 
part  of  the  purchaser  for  any  reason  in  no  way  attribu- 
table to  the  broker  the  sale  falls  through,  nevertheless 
the  broker  is  entitled  to  his  commissions  for  the  simple 
reason  that  he  has  performed  his  contract. ' ' 3 

If  the  vendor  enters  into  an  enforceable  contract  of 
sale  with  the  purchaser,  the  failure  of  the  purchaser  to 
carry  out  the  contract  does  not  deprive  the  broker  of  his 
right  to  commissions.4  But  where  the  broker,  knowing 
of  defects  in  the  title,  fails  to  bring  these  to  the  attention 
of  the  purchaser,  and  assures  the  vendor  that  the  pur- 
chaser will  take  the  property  notwithstanding  the  de- 
fective title,  he  is  not  entitled  to  commissions  when  the 
purchaser  refuses  to  consummate  the  purchase  on  ac- 
count of  these  defects.5 


§  173.    Abandonment  of  Broker  by  Customer. 

Where  a  broker  presents  the  name  of  a  customer,  and 
the  customer  through  no  fault  of  the  owner  of  the  prop- 
erty, refuses  to  enter  into  any  negotiations  through  such 
broker,  the  latter  is  not  entitled  to  commissions  if  the 
premises  are  thereafter  sold  to  the  same  customer 
through  another  broker.6 

In  Oppenheimer  v.  Barnett,  131  App.  Div.  617  (N.  Y. 
1909),  it  is  said  that  where  the  owner's  broker  calls  the 
attention  of  a  person  to  the  fact  that  property  is  for  sale, 
that  in  no  way  obligates  such  person  to  make  the  pur- 

•Tackett  v.   Powley,    130  111.  App.    100   (1906). 

•Glider  v.  Davis,  137  N.  Y.  506  (1893);  and  see  note  In  Lunney  Y.  Healey,  44 
L.  R.  A.  623  (1898). 

*  Plnkerton  r.  Hudson,  113  S.  W.  35  (Ark.  1908).     Cf.  §§  117-119  tupra. 
6  Hynes  v.   Brettelle,   70  Mo.   App.  344    (1897). 
•Sampson  v.  Ottlnger,  93  App.   Dlv.   226   (N.  Y.  1904). 


FAILURE   OF   CUSTOMER   TO   COMPLETE.  183 

chase  through  him;  on  the  contrary,  such  person  may 
go  directly  to  the  seller  and  make  the  best  trade  he  can 
with  him,  or  he  may  purchase  through  some  broker 
whom  he  selects  himself.  In  either  case,  the  broker  whom 
the  seller  had  originally  employed  would  have  no  cause 
for  complaint  against  the  purchaser  or  against  the  bro- 
ker to  whom  the  seller  paid  the  commissions.  If  the 
broker  is  entitled  to  commissions  at  all,  it  is  from  the 
seller,  and  if  the  broker  is  the  procuring  cause  of  the  sale, 
he  must  look  to  him  and  not  to  the  purchaser.  The  pur- 
chaser of  real  estate  is  not  obliged  to  see  that  a  broker 
employed  by  the  seller  gets  the  commissions  to  which  he 
claims  he  is  entitled. 

§  174.    Misrepresentations  by  Vendor. 

Where  the  sale  would  have  been  completed  but  for  the 
misrepresentations  of  the  vendor,  the  broker  has  been 
held  entitled  to  his  commission.7 

On  the  other  hand,  where  the  broker  was  familiar 
with  the  property  and  the  owner  misstated  the  dimen- 
sions, and  the  proposed  buyer,  after  making  a  deposit, 
refused  to  enter  into  a  contract,  because  the  dimensions 
were  less  than  stated,  the  broker  was  denied  commis- 
sions.8 And  where  the  owner  stated  the  frontage  of  the 
lot,  and  it  turned  out  that  the  frontage  was  less  than 
stated  and  the  purchaser  produced  by  the  broker  refused 
to  make  contract  on  account  of  such  shortage,  the  broker 
was  held  not  entitled  to  commissions,  the  Second  Depart- 
ment of  the  Appellate  Division  of  the  New  York  Su- 
preme Court  holding  that  it  was  the  broker's  duty  to 
procure  a  purchaser  for  the  plot  "  just  as  it  was.'" 


184  COMMISSIONS   AND    THEIR    RECOVERY. 

And  in  another  New  York  case,10  it  was  said  that 
there  is  no  duty  on  the  part  of  a  real  estate  owner  to  in- 
form a  broker  as  to  whether  there  are  covenants  as  to 
nuisances  in  his  chain  of  title,  unless  he  is  asked  about  it, 
and  that  it  is  the  duty  of  the  broker  to  ask,  if  he  wants 
to  know.11 


w  Ranger  v.  Lee,   66  Misc.   144   (N.  Y.  1910). 

11  See  §  168  supra  as  to  the  vendor's  liability  for  commissions  where  the  consum- 
mation of  the  sale  is  prevented  by  the  defective  title  of  the  vendor.  For  a  general  dis- 
cussion of  misrepresentations,  see  Part  IV,  "  Fraud,"  §§  279  et  seq. 


CHAPTER   XVIII. 
COMMISSIONS  ON  EXCHANGES  OF  PROPERTY. 

§  175.    General  Statement. 

The  same  rules  apply  to  an  exchange  of  property  as 
to  its  sale.  (§§  176-178.) 

Authority  to  sell  does  not  imply  authority  to  ex- 
change. (§  179.) 

While  under  the  general  rule  a  broker  cannot  recover 
commissions  from  both  sides,  yet  where  both  agree  in  the 
contract  to  pay  the  broker,  their  knowledge  of  the  situa- 
tion appears.  (§  180.) 

If  a  contract  of  exchange  is  brought  about  by  the 
broker,  he  is  entitled  to  his  commission  even  though  one 
of  the  parties  be  unable  to  fulfill  the  contract.  (§§  181- 
183.) 

§  176.    Conflicting  Decisions  as  to  When  Commissions 
are  Earned. 

Some  decisions  hold  that  the  broker  is  not  entitled  to 
commissions  until  he  has  brought  about  a  valid  enforce- 
able contract,  and  some  that  the  contract  must  be  actu- 
ally performed,  while  others  hold  that  the  commissions 
are  earned  when  the  broker  has  produced  a  customer 
ready,  willing  and  able  to  purchase  on  his  principal's 
terms.1  There  is  the  same  conflict  of  decisions  as  to 
when  commissions  on  an  exchange  are  earned. 

Save  as  to  those  sections  dealing  with  failure  to  ful- 
fill contract,2  the  authorities  presented  in  this  chapter 
deal  primarily  with  the  situation  as  it  is  affected  by  the 


1  See  §§  117-119,   157,   ICC  supra. 
»  See  §§   181-183  infra. 


185 


186  COMMISSIONS   AND    THEIK   RECOVERY. 

rule  that  commissions  are  earned  when  the  broker  pro- 
duces a  party  ready,  able  and  willing  to  meet  the  require- 
ments of  the  broker's  employer. 

§  177.    Commissions  on  Exchanges. 

The  broker  may,  as  in  a  sale,  obligate  himself  to  vari- 
ous conditions  which  will  affect  his  claim  to  commis- 
sions.3 Under  the  ordinary  employment,  however,  his 
commissions  are  earned  when  he  produces  a  person 
ready,  able  and  willing  to  perform  his  part  of  the  agree- 
ment upon  the  terms  named  by  the  broker's  employer.4 

"  To  entitle  a  real  estate  broker  to  compensation," 
says  the  court  in  Mutchnick  v.  Davis,  130  App.  Div.  419 
(N.  Y.  1909),  "  he  must  produce  a  customer  not  only 
willing  but  able  to  purchase  his  client's  property  upon 
the  terms  fixed  by  such  client.  The  same  rule  applies  to 
a  proposed  exchange  of  real  estate. ' ' 5  Commissions  are 
earned  when  a  customer  is  procured  ready  to  make  an 
exchange  on  terms  satisfactory  to  the  employer.6 

§  178.    Employment. 

We  have  already  seen  that  one  of  the  requisites  to  a 
broker's  commissions,  is  employment.7  The  same  applies 
to  an  exchange.8  A  volunteer  has  no  claim  to  commis- 
sion. Thus,  where  a  person  ascertained  that  A  desired 
to  sell  or  exchange,  and  presented  A's  card  to  B,  which 
resulted  in  an  exchange,  it  was  held  that  the  broker  was 
not  entitled  to  commission.9 

«  See  §§  113-119  supra. 

*Lockwood  v.  Halsey,  41  Kans.  170  (1889);  Suydam  v.  Healy,  93  App.  Div.  396 
(N.  Y.  1904)  ;  cf.  Norman  v.  Reuther,  25  Misc.  161  (N.  Y.  1898).  See  also  §§  181-183 
infra. 

B  See  also  Schulte1  v.  Meehan,   133  111.  App.  499   (1907). 

6  Hannan  v.  Prentiss,   124  Mich.  419   (1900).     Where  a  person  refuses  to  enter  into 
an  exchange  effected   by   the  broker,   see  Mulhall   v.    Bradley,    50  App.    Div.    179    (N.    Y. 
1900),   as  to  whether  the  broker  is  entitled   to  recover   as  damages  the   commissions   the 
other  party  to  the  exchange  was  to  pay  him. 

7  See  Ch.  X  supra. 

8  See  Form  38  infra,  Ch.   XL,    "Authority  of  Broker  to  Exchange  Property." 
»See  Walton  v.   M'Morrow,  63  App.   Div.   147    (N.   Y.   1901);  aff'd,   175   N.   Y.   493 

(1903),  no  opinion. 


COMMISSIONS   ON    EXCHANGES   OF   PROPERTY.  187 

§  179.    Authority  to  SeU  Does  Not  Give  Authority  to 
Exchange. 

Though  a  broker  has  authority  to  sell,  this  does  not 
in  itself  either  give  or  imply  authority  to  exchange. 
"In  the  absence  of  any  trade  usage,  the  power  to  sell 
does  not  carry  with  it  or  imply  the  power  to  barter  or 
exchange."  10 

§  180.    Commissions  from  Both  Sides. 

The  rule  that  a  broker  cannot  act  for  both  sides,  with- 
out their  knowledge  if  he  is  vested  with  any  discretion, 
applies  to  an  exchange.11  But  the  broker  may  recover 
his  commissions  from  both  parties  where  they  knew  that 
he  was  acting  for  both  sides,  and  this  would  appear  where 
the  contract  provides  that  each  of  the  parties  is  to  pay  the 
broker  a  commission.12  It  has  even  been  intimated  that 
the  principals  might  reasonably  assume  that,  in  an  ex- 
change of  property,  a  broker  receives  commissions  from 
both  sides.13 

§  181.    Rule  When  Contract  Has  Been  Executed. 

As  has  been  shown,  the  broker's  commissions  are  not 
earned  until  he  has  produced  a  customer  not  only  ready 
and  willing,  but  able  to  exchange.  This  requires  a  valid 
title  to  the  property  proffered  by  the  customer  and  the 
broker  is  not  entitled  to  a  commission  on  the  transaction 
until  this  requirement  is  met.  When,  however,  an  en- 
forceable contract  of  exchange  has  been  entered  into,  the 
conditions  are  different.  "  The  ordinary  rule  is  that,  in 

10  Kearns  v.  Nickse.  66  Att.  779  (Conn.  1907),  (citing  Woodward  v.  Jewell.  140 
I'.  S.  I'.".::;  :!5  I,.  Ed.  481;  11  Sup.  Ct.  Rep.  784;  Hayes  v.  Colby.  65  N.  n.  193;  18  Atl. 
251  ;  Drury  v.  Barnes.  29  111.  App.  166;  Cleveland  v.  State  Bk.  16  Ohio  St.  230;  88  Am. 
IK-r  44.-,;  Trndo  v.  Anderson.  10  Mich.  357;  81  Am.  Dee.  795;  Brown  v.  Smith.  <!7  N.  C. 
i!45i;  Monin  v.  James.  20  Mtse.  235  (N.  Y.  1R97)  ;  Davis  v.  Cassette,  30  111.  App.  44 
tl^M.  S«-r  :il so  Mfnifee  v.  Htggins,  57  111.  50  (1870). 

»  See  §  51    gi,i>ra. 

12  Willner  v.   Seale.   127  App.   Div.   180   (N.  Y.   1908). 

i«  Marks  v.  O'Donnell.  66  Misc.  147  (N.  Y.  1910).  See  JS  48-53  »upra  as  to 
broker's  right  to  act  for  both  sides. 


188  COMMISSIONS  AND   THEIR   RECOVERY. 

the  absence  of  an  express  agreement  to  the  contrary,  a 
real  estate  broker  employed  to  effect  an  exchange  of  real 
estate  is  entitled  to  his  commissions,  where,  through  his 
procurement,  a  contract  for  the  exchange  of  properties 
has  been  agreed  upon  and  entered  into  between  his  cus- 
tomer and  the  person  with  whom  the  exchange  was  to  be 
effected,  even  though  one  of  the  parties  be  unable  to  ful- 
fill the  contract." 14 

Thus,  where  the  broker  is  employed  in  the  ordinary 
way  to  bring  about  an  exchange  and  the  defendant  en- 
ters into  a  contract  for  the  exchange,  and  it  then  devel- 
ops that  the  person  who  entered  into  the  contract  with 
the  defendant  had  no  title  to  the  property  which  he  agreed 
to  exchange  for  the  defendant's  property,  the  broker  is 
entitled  to  his  commissions.15 

Where  the  broker  is  employed  to  effect  an  exchange, 
he  has  earned  his  commission  when  the  principal  makes 
a  valid  agreement  with  the  customer  produced  by  the 
broker,  even  if  it  turns  out  that  the  customer  cannot  make 
a  good  title,  provided  the  broker  acted  in  good  faith. 
There  is  no  distinction  between  a  sale  and  an  exchange 
in  this  respect.16  The  case  just  cited  (Roche  v.  Smith,  176 
Mass.  595)  says  that  the  ground  on  which  this  is  settled  is 
that  by  entering  into  a  valid  contract  with  the  customer, 
the  principal  accepts  the  customer  as  able,  ready  and 
willing. 

Where  one  of  the  parties  to  an  exchange  fails  to  per- 
form the  written  agreement  of  exchange  previously  en- 
tered into  and  the  exchange  is  not  made,  the  broker  who 
brought  the  parties  together  may  recover  his  commissions 
from  his  principal,  even  though  the  exchange  was  not 
made  and  the  broker's  principal  was  not  at  fault.17  And 

"Norton  v.  Genesee  Nat.  Savings  &  Loan  Assn.,  57  App.  Div.  520  (N.  Y.  1001), 
(citing  Kalley  v.  Baker,  132  N.  Y.  1  (1892)  )  ;  Charles  v.  Cook,  88  App.  Div.  81  (N.  Y. 
1903). 

w  Baumann   v.    Nevlns,   52   App.    Div.    290    (N.    Y.    1900). 

"  Roche  v.   Smith,   176  Mass.   595;  51   L.  R.  A.   510   (1900). 

"Leete  v.   Norton,  43  Conn.   219   (1875). 


COMMISSIONS   ON    EXCHANGES   OF    PROPERTY.  189 

this  is  particularly  so  where  the  contract  of  exchange  pro- 
vides that  if  either  of  the  parties  neglect  or  refuse  to  per- 
form the  same,  the  other  shall  be  entitled  to  a  fixed 
amount  as  damages.18 

It  must  be  noted,  however,  that  while  the  broker  is  not 
a  guarantor  of  the  title  offered,  and  broker's  commissions 
cannot  be  defeated  because  of  a  defect  in  the  principal's 
title,  yet  where  it  was  a  condition  of  an  exchange  that 
perfect  title  should  be  shown  by  an  abstract  to  be  fur- 
nished for  that  purpose,  the  terms  are  not  complied  with 
and  the  commissions  are  not  earned  unless  a  person  is 
produced  who  is  able  to  show  the  title  required  by  the 
contract.19 

§  182.    Reason  for  Rule.20 

"  In  an  action  by  a  broker  to  recover  commissions  upon 
a  proposed  exchange  of  real  property,  it  is  necessary  for 
him  to  show,"  says  the  court  in  Mutchnick  v.  Davis,  130 
App.  Div.  419  (N.  Y.  1909),  "  that  the  customer  produced 
by  him  was  the  owner  of  the  property  offered  to  be  ex- 
changed as  well  as  that,  after  the  terms  of  the  exchange 
had  been  agreed  upon,  the  client  refused  to  carry  them 
out.21  Where  the  agreement  to  sell  or  exchange  real  prop- 
erty no  longer  remains  executory  but  has  been  consum- 
mated by  an  actual  execution  of  a  written  contract  there- 
for the  rule  is  different,  and  in  the  absence  of  any  stipula- 
tion to  the  contrary  the  broker's  commissions  are  earned 
when  the  contract  is  signed  by  the  client,  and  a  defect  in 
title  under  such  circumstances  becomes  unimportant  and 
constitutes  no  defense  to  the  payment  of  the  commis- 
sions.22 The  distinction  between  these  two  situations 


"Barber  v.   Hildebrand,   42  Nebr.   407    (1894). 

20  See  §  176  supra  as  to  scope  of  this  chapter. 

n  Citing  Woolley  v.  Lowenstein,  83  Hun  155  (N.  Y.  1894)  ;  Alt  v.  Doscher,  102 
App.  Div.  344  (N.  Y.  1905). 

22  Citing  Kalley  v.  Baker,  132  N.  Y.  1  (1892);  Gilder  v.  Davis,  137  N.  Y.  504 
(1893). 


190  COMMISSIONS   AND   THEIR   RECOVERY. 

is  very  wide  and  very  apparent.  In  the  absence  of  any 
stipulation  to  the  contrary  a  marketable  title  to  real  prop- 
erty is  always  presumed  to  be  bargained  for ;  23  and  when 
a  broker  produces  a  person  who  proposes  to  exchange 
property  with  his  client,  that  person  must  have  good  title 
to  the  property  which  is  proposed  to  be  given  in  exchange. 
On  the  other  hand,  if  the  client  sees  fit  to  execute  a  con- 
tract and  exchange  property,  whether  the  other  person 
has  a  good  title  or  not,  the  broker  has  performed  his  serv- 
ice to  the  satisfaction  of  his  client  and  has  earned  his 
commission. ' ' 24 

Where  the  broker  brings  about  an  exchange,  the  party 
employing  him  cannot  resist  a  claim  for  commission  on 
the  ground  that  the  title  of  the  other  party  to  the  exchange 
is  defective  and  that  he  is  therefore  unable  to  perform 
the  contract.25 

In  Baumann  v.  Nevins,  52  App.  Div.  290  (N.  Y.  1900), 
the  court  said :  ' '  If  the  defendant  employed  him  to  effect 
the  exchange,  and  he  brought  parties  ready  and  willing  sor 
to  do,  and  a  contract  was  entered  into  binding  upon  them, 
it  was  an  acceptance  by  the  defendant  of  the  purchasers 
proposed  by  the  plaintiff,  and  he  became  entitled  to  his 
commission,  entirely  independent  of  the  fact  as  to  whether 
the  defendant  could  convey  or  not.  The  plaintiff  was  not 
an  insurer  of  the  defendant 's  title.  If  he  chose  to  employ 
a  broker  to  dispose  of  property  to  which  he  had  no  title, 
and  the  broker  brought  purchasers  who  were  acceptable 
to  him,  and  a  contract  was  entered  into  between  them  for 
the  purchase,  it  was  entirely  immaterial  to  the  broker  as 
to  whether  his  employer  had  title  or  not.  His  work  was  ac- 
complished, and  his  commission  did  not  depend  upon  the 
fact  of  the  ability  of  his  employer  to  carry  out  his  con- 
tract. The  provision  in  the  contract  in  regard  to  the  time 

»  Citing  Scndder  v.  Watt,  98  App.  Div.  228  (N.  Y.  1904);  Burwell  v.  Jackson, 
9  N.  Y.  535  (1854). 

24  See  the  authorities  under  Chap.  XVII  supra. 

25  Kalley    v.    Baker.    132    N.    Y.    1    (1892);    Roche   v.    Smith,    176    Mass.    595;    51 
L.  R.  A.  510  (1900).     See  also  §  168  supra. 


COMMISSIONS   ON   EXCHANGES   OF   PROPERTY.  191 

for  the  completion  of  the  purchase  was  entirely  for  his 
benefit,  and  his  default  in  conveying  the  title  could  not  de- 
feat the  plaintiff's  claim  for  commissions."  Of  course 
the  broker  must  have  acted  in  good  faith  in  such  a  case. 

It  is  somewhat  difficult  to  follow  the  words  of  this 
opinion,  for  in  its  course  the  court  speaks  at  one  and  the 
same  time  apparently  about  the  proposed  purchasers  not 
having  title  2G  and  then  about  the  defendant  not  having 
title,  while  the  facts  of  the  case  seem  to  indicate  that  the 
only  question  was  as  to  the  proposed  purchaser's  title. 
It  may  be  that  the  court  in  speaking  about  the  defendant's 
position  in  not  being  able  to  convey,  intended  that  as  a 
statement  of  the  law  if  the  facts  had  been  that  way,  while 
on  the  other  hand  it  may  mean  that  as  the  proposed  pur- 
chasers were  unable  to  convey  their  property,  therefore 
the  defendant  was  unable  to  convey  his  in  exchange. 

In  a  dissenting  opinion,  Justice  Ingraham  says:  "  I 
do  not  understand  that  a  broker  complies  with  the  terms 
of  his  employment  until  he  brings  a  customer,  not  only 
ready  and  willing,  but  also  able  to  purchase  the  property 
upon  the  terms  proposed ;  and  the  production  of  a  person 
ready  to  sign  a  contract,  but  who  was  manifestly  unable 
to  perform  it,  does  not  comply  with  the  conditions  of  em- 
ployment under  which  the  broker  is  entitled  to  recover 
his  commissions." 

Also  in  Norman  v.  Eeuther,  25  Misc.  161  (N.  Y.  1898), 
it  was  held  (in  an  exchange),  that  the  broker  must  show 
that  he  had  procured  a  valid  contract  of  exchange,  and 
that  it  was  not  sufficient  to  show  that  the  broker  had  se- 
cured a  person  who  was  not  the  owner  of  the  property,  to 
sign  a  contract  for  the  exchange.27 

§  183.    Rule  as  Affected  by  Broker's  Bad  Faith. 

Where  a  written  agreement  for  an  exchange  was  pro- 

M  See  §   181   supra. 
27  See  also  §  183  infra. 


192  COMMISSIONS   AND    THEIR   RECOVERY. 

cured  by  the  broker,  but  it  turned  out  that  the  other  party 
to  the  exchange  did  not  own  all  the  land  which  he  agreed 
to  convey  and  was  not  able  to  make  a  title  at  the  appointed 
time,  and  the  broker  knew  that  the  party  he  procured  did 
not  own  the  property  he  was  to  convey  in  exchange,  and 
such  party  became  financially  irresponsible,  and  went  into 
insolvency,  the  lower  court  refused  the  broker  commis- 
sions. The  Supreme  Judicial  Court  sustained  the  judg- 
ment,28 but  apparently  only  because  of  the  exceptional 
facts,  saying :  '  *  In  view  of  the  state  of  the  evidence,  we 
do  not  regard  this  as  an  abstract  unqualified  ruling  that 
in  all  cases  in  order  to  entitle  a  broker  to  his  commission, 
the  contract  of  sale  or  exchange  must  be  one  which  could 
be  enforced  specifically ;  we  construe  it  rather  as  a  ruling 
on  the  specific  facts  which  the  Judge  expressly  or  prob- 
ably found.  We  think  that  the  Judge  only  meant  to  say 
that  a  broker  does  not  earn  his  commission  by  bringing  a 
person  to  his  employer  who  assumes  to  contract  as  owner, 
when,  in  fact,  he  is  not  owner,  as  the  broker  knows  and 
the  employer  does  not  know,  and  who,  within  the  few  days 
allowed  for  performance  turns  out  unable  to  perform  his 
contract  and  irresponsible.29  We  regard  this  proposition 
as  correct,  and  as  consistent  with  the  well-settled  law 
that,  in  general,  commissions  are  earned  when  a  binding 
contract  of  sale  is  made. ' ' 30 


M  Bnrnham  v.  Upton,  174  Mass.  409  (1899). 

»  Referring  to  Butler  v.    Baker,    17  R.    I.   582;   Grensel  v.   Dean,    98   Iowa  405;   4 
Am.  &  Eng.  Ency.  of  Law  (2nd  Ed.),  972-975,  Sab.  V.  "Brokers." 

"Citing  Bice  v.   Mayo,   107  Mass.    550;   Ward  v.   Cobb,    148   Mass.   518,    521. 


CHAPTER  XIX. 
COMMISSIONS  ON  LOANS. 

§  184.    General  Statement. 

In  some  jurisdictions  commissions  on  loans  are  not 
earned  until  the  loan  is  actually  made,  or  refused  because 
of  the  fault  or  miscarriage  of  the  principal.  Elsewhere 
they  are  held  to  be  earned  when  the  broker  has  procured 
a  lender  ready,  willing  and  able  to  loan  on  the  principal's 
terms.  (§§  185-190.) 

Defects  in  title  to  property  may  defeat  a  loan  but  do 
not  deprive  the  broker  of  his  claim  for  commission. 

(§  191.) 

The  broker  must  have  been  duly  employed,  and  the 
loan  must  be  procured  on  the  terms  of  his  principal. 
(§§  192-193.)  And  the  broker  is  entitled  to  his  commis- 
sion after  a  loan  has  been  found,  even  though  the  prin- 
cipal refuses  to  accept.  (§  194.) 

§  185.    Commissions  for  Procuring  Loan. 

We  have  seen  that  there  is  some  conflict  in  the  deci- 
sions on  the  question  as  to  when  the  broker  has  earned 
his  commissions  on  a  sale  of  property.1  And  so,  there  is 
a  difference  of  opinion  as  to  when  the  broker  is  entitled 
to  his  commissions  with  reference  to  procuring  mortgage 
loans  on  real  estate.  The  conflict  of  opinion  on  the  sub- 
ject with  respect  to  loans  is,  however,  somewhat  different 
than  that  with  respect  to  sales,  or,  at  least,  must  be 
stated  differently. 

1  See  §§  117-119  supra. 

193 


194  COMMISSIONS   AND    THEIR   EECOVERY. 

There  are  authorities  which  hold  that  the  broker's  ob- 
ligation in  the  matter  of  a  loan  is  not  regarded  as  fully 
performed  until  the  prospective  lender  actually  makes 
the  loan,  or  refuses  because  of  the  fault  or  miscarriage 
of  the  principal.  Among  the  decisions  to  this  effect  are 
those  of  the  courts  of  New  York  State.2  The  above  rule 
will  therefore  be  called  the  "  New  York  rule  "  in  this 
chapter. 

On  the  other  hand,  there  are  authorities  which  hold 
that  a  loan  broker  is  entitled  to  his  commissions  when  he 
has  procured  a  lender  who  is  ready,  willing  and  able  to 
lend  the  money  upon  the  authorized  terms.  This  type  of 
cases  is  also  illustrated  in  the  present  chapter. 

§  186.    New  York  Rule. 

A  broker  employed  to  procure  a  loan  on  real  estate 
is  not  entitled  to  his  commissions  on  mere  proof  that  he 
secured  a  person  able  and  willing  to  make  the  loan,  who 
was  accepted  by  his  principal.  The  contract  of  broker- 
age in  the  matter  of  a  loan  differs  from  one  with  respect 
to  a  sale  of  real  estate,  in  that  it  is  not  regarded  as  fully 
performed  until  the  prospective  lender  actually  makes  the 
loan  or  refuses  because  of  the  fault  or  miscarriage  of  the 
principal.3  In  Henken  v.  Schwicker,  174  N.  Y.  at  302 
(1903),  the  New  York  Court  of  Appeals  said,  though  per- 
haps obiter,  that  in  the  absence  of  more  definite  specifi- 
cations, the  broker's  commissions  are  earned  when  he 
procures  a  lender  ready  and  willing  to  make  the  loan. 

But  where  a  broker  has  secured  the  acceptance  of  a 
loan,  but  the  loan  is  not  made  because  the  owner's  title 
is  defective,  the  broker  is  entitled  to  his  commissions. 
In  such  case,  the  broker  must  show  clearly  that  the  title 
is  defective  and  that  the  money  was  not  advanced  for  that 

•See  §   186  infra. 

'Duckworth  v.  Rogers,  109  App.  DiT.  168  (N.  Y.  1905);  Ashfleld  v.  Case,  93 
App.  Div.  452  (N.  Y.  1904). 


COMMISSIONS   ON   LOANS.  195 

reason.  The  mere  fact  that  the  title  was  rejected  by  law- 
yers or  title  guarantee  companies,  does  not  have  the  effect 
of  establishing  that  the  title  was  defective  as  a  matter  of 
fact.  The  specific  facts  must  be  shown  evidencing  the  de- 
fect.4 And  in  such  a  case  the  broker  cannot  recover  under 
an  allegation  of  full  performance.  He  must  allege  the 
fact  of  non-performance  and  the  reason  or  excuse  there- 
for.5 

§  187.    New  York  Rule  as  Affected  by  Failure  of  Prin- 
cipal.6 

And  while  1 1  the  general  rule  applicable  to  the  employ- 
ment of  brokers  to  procure  a  loan  is  that  their  commis- 
sions are  not  earned  unless  the  loan  is  made,"  7  this  rule 
would  not  be  applicable  where  the  negotiations  fall 
through  on  account  of  the  principal's  misrepresentation 
as  to  the  security  to  be  given.8  This  condition  emphasizes 
the  importance  of  having  most  satisfactory  proof  of  the 
ability,  readiness  and  willingness  of  the  party  to  make 
the  loan  and  to  show  that  the  failure  to  consummate  the 
same  was  solely  owing  to  the  failure  of  the  broker's  prin- 
cipal.9 "  In  other  words,"  says  the  court,10  "  there  may 
be  a  liability  for  a  breach  of  a  contract  where  a  person 
after  employing  a  broker  to  make  a  loan  on  certain  se- 
curities discovers  that  his  securities  are  not  as  valuable 
as  he  supposed  and  that  he  would  be  unable  to  perform 
a  contract  to  furnish  securities  for  a  loan  according  to 
his  representations  to  his  broker,  but  that  would  not 
afford  a  basis  for  a  recovery  by  the  broker  of  commis- 
sions as  for  full  performance  on  his  part." 

«  Catling  T.  Central  Spar  Vereln,  67  App.  Dlv.  50  (N.  Y.  1902).  See  also  {§  168, 
169  supra. 

•  Stone  v.   Goodsteln,   49  Misc.   482   (N.   T.   1906). 

•  See  §  185  supra. 

»Holllday  v.  Roxbnry  Distilling  Co..  130  App.  Dlv.  054  (N.  Y.  1909),  (citing 
Crasto  v.  White,  52  Hun  473  (N.  Y.  1889)  ;  Ashfleld  v.  Case.  93  App.  Div.  452  (N.  Y. 
1904)  ;  Duckworth  v.  Rogers,  109  App.  Dlv.  168  (N.  Y.  1905)  ). 

8  See  §  174  supra. 

•  Holliday  v.  Roxbury  Distilling  Co.,  supra. 

•  I* 


196  COMMISSIONS   AXD    THEIR   RECOVERY. 

An  allegation  that  the  broker  was  to  procure  the  loan 
is  not  established  by  proving  that  he  produced  a  person 
ready,  prepared  and  willing  to  make  the  loan.  Where 
the  contract  is  to  procure  the  loan,  it  should  appear  that 
it  was  actually  secured,  and  in  such  case  the  right  of 
action  depending  upon  a  condition  precedent,  perform- 
ance should  be  averred.11 


§  188.    The  Rule  in  Some  of  the  Other  States. 

In  other  states  the  second  rule  mentioned  in  §  185 
prevails.  "  A  broker  who  is  employed  to  procure  a  loan 
is  entitled  to  his  commission  when  he  procures  a  lender 
ready,  willing  and  able  to  lend  the  money  upon  the  terms 
proposed.  His  right  to  commission  does  not  depend  upon 
the  contingency  of  the  applicant 's  acceptance  of  the  loan 
but  upon  his  performance  of  his  part  of  the  contract. 
The  principal  cannot  deprive  the  broker  of  his  commis- 
sion by  refusing  to  accept  the  loan  which  the  negotiations 
of  the  latter  have  resulted  in  securing.  In  Green  v.  Lucas, 
33  L.T.  (N.  S.)  584,  Lord  Cairns  said  in  a  case  very  simi- 
lar to  the  present:  'It  appears  to  me  that  the  plaintiff 
had  done  everything  which  agents  in  this  kind  of  work 
were  bound  to  do,  and  it  would  be  forcing  their  liability 
if  they  were  to  be  held  answerable  for  what  happened 
after.  If  the  contracts  afterwards  were  to  go  off  from  the 
caprice  of  the  lender  or  from  the  infirmity  in  the  title,  it 
would  be  immaterial  to  the  plaintiffs.'  Green  v.  Eeed, 
3  F.  &  F.  226;  Gre^  v.  Lucas,  31  L.  T.  (N.  S.)  731.  In 
principle  the  case  "of  a  broker  negotiating  a  loan  is  the 
same  as  that  of  a  looker  negotiating  a  sale  of  property, 
and  in  the  latter  case  it  is  uniformly  held  that  the  com- 
missions are  earned  when  a  purchaser  is  found  able  and 
willing  to  buy  on  the  terms  proposed.  In  such  cases,  the 

"McLaughlln  v.  Whiton,  37  Misc.  838  (N.  Y.  1902).  See  also  §§  1CG-168,  172 
supra,  191  infra,  for  failure  to  complete  on  account  of  defects. 


COMMISSIONS   ON    LOANS.  197 

broker 's  right  to  compensation  is  held  to  accrue  when  he 
has  furnished  a  purchaser,  and  does  not  depend  upon  the 
ultimate  consummation  of  the  sale." 12 


§  189.    General  Statement  of  Rule.13 

In  another  case,14  the  rule  is  stated  thus :  "  The  rights 
and  duties  of  a  broker  employed  to  secure  a  loan  depend 
upon  the  same  principles  which  govern  the  broker  who 
undertakes  to  find  a  purchaser  of  property,  and  no  sub- 
stantial distinction  can  be  made.  The  inquiries  in  each 
case  are,  what  did  the  broker  undertake  to  do?  has  he 
completed  his  undertaking?  and  if  not, is  the  difficulty  and 
failure  attributable  to  his  own  act  or  that  of  the  party  by 
whom  he  was  employed?  The  loan  broker  is  entitled  to 
his  commissions  when  he  has  procured  a  lender  who  is 
ready,  willing  and  able  to  lend  the  money  upon  the  author- 
ized terms.  This  done,  his  duty  is  performed  and  he  is 
entitled  to  compensation  whether  the  loan  is  consum- 
mated or  not,  unless  his  right  thereto  is,  by  special  agree- 
ment, made  to  depend  upon  conditions  which  the  law  does 
not  annex  to  his  engagement  as  a  broker.  He  assumes 
no  greater  or  different  obligation  in  respect  to  title  in 
case  of  a  loan  than  when  employed  to  make  a  sale.  The 
borrower,  when  employing  a  broker  to  procure  or  make 
a  loan  for  him,  always  does  so  upon  the  implied  condi- 
tions (if  there  be  no  express  stipulation  in  respect  to  the 
matter),  that  he  has  the  ability  and  will  make  or  tender 
to  the  lender  a  title  free  from  infirmity.  It  is  not  the 
broker 's  duty,  and  no  part  of  his  engagement,  to  remove 
incumbrances,  or  to  cure  defects  in  title,  and,  if  the  loan 
is  not  effected  in  consequence  of  an  incumbered  or  de- 

12  Vlnton  v.  Baldwin,  88  Ind.  105,  106  (1882),  (citing  Lane  v.  Albright,  49  Ind. 
275;  Love  v.  Miller,  53  Ind.  294;  21  Am.  R.  192;  Reyman  v.  Mosher,  71  Ind.  596; 
Nfoses  v.  Blerling,  31  N.  Y.  462;  24  All).  Law  J.  536;  Mooney  v.  Elder.  56  N.  Y.  238; 
Hart  v.  Hoffman.  44  How.  Pr.  168;  Plckett  v.  Badger,  1  C.  B.  (N.  S.)  296). 

ls  See  §  185  supra. 

"  Peef  v.   Sherwood,  43  Minn.   448    (1890). 


198  COMMISSIONS   AND    THEIR   RECOVERY. 

fective  title,  he  is  entitled  to  his  commissions.  He  has 
performed  his  contract;  the  default  is  with  the  other 
party."15 

§  190.    Further  Statement  of  Rule.16 

In  a  Missouri  case,17  the  court  thought  that  the  same 
rule  should  apply  to  a  loan  as  to  a  sale,  but  the  language 
employed  makes  it  somewhat  difficult  to  determine  in 
which  rule  the  decision  should  be  classed. 

In  the  case  referred  to,  Judge  Biggs  of  the  St.  Louis 
Court  of  Appeals,  wrote :  *  *  The  contract  of  a  real  estate 
broker  for  the  sale  of  property  is  that  he  will  secure  and 
produce  a  purchaser  who  is  willing,  ready  and  able  to 
make  the  purchase  upon  the  authorized  terms.  *  *  *  The 
same  rule  should  govern  in  engagements  by  brokers  for 
the  negotiation  of  loans.  It  is  not  sufficient  in  such  cases, 
that  the  broker  has  found  a  person  who  has  the  requisite 
sum  of  money  and  is  willing  to  loan  it  on  the  security 
offered;  but  when  his  client  is  informed  of  this  and  he 
signifies  a  willingness  to  proceed  with  the  business,  it  is 
then  the  further  duty  of  the  broker  to  produce  the  lender, 
or  a  contract  binding  the  latter  to  loan  the  money,  and 
until  he  does,  his  contract  is  not  performed.  The  clause 
in  italics  expresses  the  views  of  my  associates.  In  that  I 
do  not  concur.  But  these  latter  duties  become  unneces- 
sary and  useless,  if  the  borrower  refuses  to  accept  the 
money  or  revokes  the  authority  of  the  broker. ' ' 

The  subject  is  further  illustrated  by  Fitzpatrick  v. 
Gilson,  176  Mass.  477  (1900),  in  which  the  contention  was 
"  that  a  broker  who  is  employed  '  to  procure  a  loan  '  does 
not  earn  his  commission  unless  the  money  to  be  borrowed 
is  actually  paid  over,  or  a  valid  contract  is  made  by  which 

» Citing  VInton  v.  Baldwin,  88  Ind.  104 ;  Holly  v.  Gosling,  3  E.  D.  Smith  262 ; 
Doty  v.  Miller.  43  Barb.  529;  Knapp  v.  Wallace,  41  N.  Y.  477;  Gonzales  v.  Broad.  57 
Cal.  224;  Green  v.  Reid,  3  Frost  &  F.  226;  Green  v.  Lucas,  31  Law  T.  (N.  S.)  731; 
Meehem  on  Ag..  §  970. 

18  See  §   185  supra. 

"Hackmann  v.   Gutweiler,   66  Mo.   App.   at  249   (1896). 


COMMISSIONS   ON   LOANS.  199 

the  customer  procured  by  the  broker  agrees  to  lend  the 
money;  and  that  this  applies  to  a  case  where  (as  in  the 
case  at  bar)  the  loan  is  not  made  because,  by  reason  of  a 
defect  in  her  title,  the  borrower  is  not  able  to  give  the 
mortgage  she  stipulated  to  give  to  the  customer  procured 
by  the  broker."  The  Court  said:  "  We  are  of  opinion 
that  this  contention  is  not  correct. 

"  The  duty  which  a  broker  is  employed  to  perform  is 
to  find  a  customer  for  that  for  which  his  principal  directs 
him  to  find  a  customer ;  in  the  case  at  bar,  for  a  loan  to  be 
made  by  the  customer,  secured  by  a  first  mortgage  on  a 
specified  lot  of  land,  to  be  made  by  the  principal.  The 
broker  found  a  customer  ready  to  make  that  loan,  and  the 
transaction  fell  through  because  the  defendant,  the  brok- 
er's principal,  did  not  have  a  good  title  to  the  land  in 
question,  that  is  to  say,  because  of  the  principal's  inability 
to  produce  that  for  which  he  employed  the  broker  to  get 
him  a  customer. 

"  When  a  broker  has  found  a  customer  for  that  for 
which  his  principal  has  employed  him  to  find  a  customer, 
the  broker  has  performed  his  duty,  and  has  earned  his 
commission,  or,  as  the  proposition  is  usually  stated,  if 
the  person  produced  by  the  broker  is  able,  ready  and 
willing  to  buy,  sell  or  lend,  as  the  case  may  be,  the  bro- 
ker's commission  is  earned.18 

"  When  the  broker  has  produced  a  customer,  his  duty 
is  at  an  end ;  so  far  as  his  rights  or  his  duty  are  concerned 
it  is  immaterial  whether  a  contract  is,  or  is  not  made,  or, 
if  made,  whether  it  is  or  is  not  performed.  The  broker's 
right  to  a  commission  is  no  more  dependent  upon  or  af- 
fected by  the  fact  that  a  contract  is,  or  is  not,  drawn  up 
and  executed,  than  it  is  by  the  fact  that  the  contract,  if 

»8  Citing  McGavock  v.  Woodllef,  20  How.  221.  222;  Green  T.  Lucas.  33  L.  T. 
(N.  S.)  584,  587;  MIddleton  v.  Thompson,  163  Penn.  St.  112;  Slbbald  v.  Bethlehem 
Iron  Co..  83  N.  Y.  378.  383,  384;  Duclos  v.  Cunningham.  102  N.  Y.  678;  Fischer  T. 
Bell,  91  Incl.  243;  Vinton  v.  Baldwin.  88  Ind.  104,  105;  Peet  T.  Sherwood.  43  Minn. 
447,  448;  Cheatham  v.  Yarbrotigh,  90  Tenn.  77;  Budd  v.  Zoller,  52  Mo.  238,  242; 
Buckingham  v.  Harris,  10  Col.  455. 


200  COMMISSIONS  AND   THEIR   RECOVERY. 

drawn  up,  is,  or  is  not  carried  into  effect.  Making  or  not 
making  a  contract  with  the  customer  produced,  enforcing 
or  not  enforcing  a  contract,  if  made,  are  matters  for  the 
broker's  principal  to  do  or  not  to  do,  as  his  ability  and 
inclination  determine;  they  are  matters  with  which  the 
broker  is  not  concerned  and  on  which  his  right  to  a  com- 
mission is  not  dependent. 

"  That  it  is  no  part  of  a  broker's  duty  to  draw  up  and 
see  to  the  execution  of  a  contract  between  his  principal 
and  the  customer  produced  by  him,  is  settled.19 

11  That  a  broker's  right  to  a  commission  is  not  de- 
feated if  a  contract  is  made  and  not  carried  out  by  reason 
of  his  principal 's  inability  to  perform, ' '  is  stated  in  the 
court 's  opinion  on  the  authorities  given  in  the  footnote.20 

§  191.    Failure  to  Complete  on  Account  of  Defects,  etc.21 

A  broker  who  procures  a  mortgage  loan  as  requested, 
is  entitled  to  his  commissions  even  though,  on  account  of 
defects  in  the  title  to  the  property,  the  loan  is  not  finally 
made.22 

Where  the  proposed  borrower  agreed  that  his  title  was 
free  and  clear  of  incumbrances,  and  the  broker  procured 
a  person  ready,  willing  and  able  to  make  the  loan,  but  on 
examination  of  the  title  it  developed  that  the  same  is  not 
free  and  clear,  and  the  proposed  lender  therefore  refuses 
to  complete  the  loan  and  advance  the  money,  the  broker  is 
entitled  to  his  commissions.23 

In  addition  to  the  broker's  commissions,  the  applicant 

»  Referring  to  Cook  v.  Welch,  9  Allen  350 ;  Desmond  v.  Stebbins,  140  Mass.  339, 
342;  Middleton  v.  Thompson,  163  Penn.  St.  112;  Keys  v.  Johnson,  68  Penn.  St.  42, 
43 ;  Duclos  v.  Cunningham,  102  N.  Y.  678. 

20  Green  v.  Lucas,  83  L.  T.  (N.  S.)  584;  Sweeney  v.  Ten  Mile  Oil  &  Gas  Co.,  130 
Penn.  St.  193;  Middleton  v.  Thompson,  163  Penn.  St.  112;  Holly  v.  Gosling,  3  E.  D. 
Smith  (N.  Y.)  262;  Peet  v.  Sherwood,  43  Minn.  447;  Cheatham  v.  Yarbrough,  90 
Tenn.  79. 

a  See  §  185  supra. 

22  Hevla  v.  Lopardo,  127  App.  Div.  189  (N.  Y.  1908)  ;  Peet  v.  Sherwood,  43  Minn. 
448  (1890),  (citing  Vinton  v.  Baldwin,  88  Ind.  104;  Holly  v.  Gosling,  3  E.  D.  Smith 
262 ;  Doty  v.  Miller,  43  Barb.  529 ;  Knapp  v.  Wallace,  41  N.  Y.  477 ;  Gonzales  y.  Broad, 
57  Cal.  224;  Green  v.  Reid,  3  Frost  &  F.  226;  Green  v.  Lucas,  31  Law  T.  (N.  S.)  731; 
Mechem  on  Air.,  §  970).  See  also  §§  168,  172  supra. 

»Flnck  v.   Bauer,   40  Misc.   218    (N.   Y.   1903). 


COMMISSIONS   ON    LOANS.  201 

for  the  loan  may  incur  further  expenses,  such  as  fees  for 
examination  of  the  title.  In  fact  it  has  been  held  that 
when  a  contract  provides  that  compensation  for  services 
in  searching  a  title  is  payable,  whether  the  title  be  ac- 
cepted or  not,  the  owner  is  liable  for  such  services.24 

But  where  the  refusal  to  finally  make  the  loan  was  be- 
cause the  application  for  the  loan  incorrectly  stated  the 
width  of  the  lot,  and  the  broker  who  made  out  the  applica- 
tion was  aware  that  the  owner  at  the  time  he  signed  the 
application  was  uncertain  as  to  the  dimensions,  the  broker 
is  equally  at  fault  with  the  owner  in  not  disclosing  such 
situation  to  the  proposed  lenders,  and  is  not  entitled  to 
commissions.25  And  where  the  agreement  is  not  the  ordi- 
nary employment  of  a  broker  to  procure  a  person  able  and 
willing  to  make  a  loan,  but  is  that  the  principal  will  ac- 
cept a  loan  from  a  certain  company  and  pay  the  broker 
his  commission  by  deducting  it  from  the  amount  of  the 
loan,  the  broker  is  not  entitled  to  commission  if  the  pro- 
posed lender  refuses  to  make  the  loan  on  account  of 
alleged  defects  of  title.26 

That  the  broker  is  not  a  guarantor  of  the  title  offered, 
and  broker's  commissions  cannot  be  defeated  because  of 
a  defect  in  the  principal's  title,  has  already  been  shown.27 

§  192.    Employment  and  Written  Authority.28 

There  must,  of  course,  have  been  an  employment  of 
the  broker  by  the  principal,  either  express  or  implied. 
The  subject  of  employment  is  presented  in  another  chap- 
ter.29 Whether  the  broker 's  authority  to  negotiate  a  loan 
must  be  in  writing  or  not,  depends  upon  local  statutes 
and  ordinances  and  the  inclination  or  disinclination  of  the 
courts  to  sustain  such  statutes  and  ordinances.  The 

«« Title  Guarantee  &  Trust  Co.  v.   Steinberg.   119  App.  Dlv.  28   (N.  Y.   1907). 

88  Shropshire  v.   Frankel.   45   Misc.   616    (N.   Y.   1904). 

"Hess   v.   Epgers.   37  Misc.   845    (N.   Y.    1902). 

»  See  §§   167,    168.    170  supra. 

18  See  §  185  supra. 

»  See  Ch.   X  nipra. 


202  COMMISSIONS   AND   THEIR   RECOVERY. 

matter  has  already  been  presented  at  some  length.30  The 
same  is  true  with  respect  to  whether  or  not  the  broker 
must  obtain  a  license  or  pay  a  tax  in  order  to  carry  on  the 
vocation.31 

Various  forms  of  applications  for  loans  are  also  given 
in  Part  VII  of  the  present  volume.32  Including  the 
amount  of  the  broker's  commission  in  the  statement  of 
the  expenses  the  borrower  is  to  be  at  in  obtaining  the  loan, 
does  not  convert  a  written  application  for  a  loan  into  a 
special  stipulation  that  the  broker  shall  not  be  entitled  to 
commission  in  accordance  with  the  general  rule.33 

§  193.    Terms  of  Principal. 

And,  of  course,  the  broker  must  procure  a  loan  as  ap- 
plied for,  that  is,  on  his  principal's  terms.34  Where,  for 
instance,  the  broker  was  employed  to  obtain  a  loan  of  not 
less  than  $220,000,  but  failed  to  secure  anything  better 
than  $210,000,  and  then  abandoned  the  matter,  he  is  not 
entitled  to  commissions  when  his  principal  subsequently 
takes  a  loan  of  $200,000  from  the  same  party.35 

And  so,  a  broker  employed  to  procure  a  loan  for  three 
years  is  not  entitled  to  commissions  for  procuring  a  loan 
which  was  not  accepted  because  subject  to  the  lender's 
right  to  enforce  payment  on  sixty  days'  notice  in  case  of 
the  passage  of  a  law  changing  the  rate  of  taxation  of 
mortgages.36  Nor  where  the  lender  insists  on  a  "  gold 
clause  "  in  the  mortgage.37 

And  where  the  principal  authorizes  the  broker  to  pro- 
cure a  loan  so  that  he  may  pay  off  certain  encumbrances 
on  his  property  and  the  broker  obtains  an  offer  of  a  loan 
on  the  property,  provided  all  encumbrances  are  paid  off, 

»  See  Ch.  Ill  supra. 

"See  Ch.  II  supra. 

M  See  Forme  40-43  infra.,   Ch.    XL. 

» Fitzpatrlck   v.    Gllson,    176   Mass.    481    (1900). 

M  See  Ch.  XII  supra. 

*  Stone  v.  Plant,  96  N.  T.  Suppl.   1030   (1905). 

18  Kronenberger  v.   Teschemacher,   52   Misc.    130    (N.   Y.    1907). 

•fCaston  v.  Qulmby,  178  Mass.  153   (1901)  ;  Peabody  v.  Dewey,  153  111.  G57  (1894). 


COMMISSIONS   ON    LOANS.  203 

and  no  part  of  the  loan  is  to  be  advanced  until  that  is 
done,  no  commissions  accrue.38 

But  where  the  broker  secures  a  loan,  and  the  owner 
refuses  to  take  same  because  he  feels  that  the  commis- 
sions claimed  by  the  broker  are  excessive,  he  cannot  after- 
wards justify  his  refusal  by  claiming  that  a  new  element 
had  been  introduced  into  the  transaction  by  the  accept- 
ance of  the  loan  on  condition  that  the  rules  of  the  accept- 
ing company  be  complied  with  and  the  loan  accepted 
within  ten  days,  and  that  the  procurement  of  the  loan  on 
this  condition  was  not  a  fulfillment  by  the  broker  of  his 
contract  of  employment.39 

§  194.    Recovery  on  Breach  by  Principal.40 

Where  the  principal  refuses  to  accept  the  loan  after 
the  broker  procures  it  upon  the  authorized  terms,  the 
broker  is  entitled  to  his  commissions.41  When  the  broker, 
at  the  request  of  his  principal,  "  has  secured  a  lender 
ready,  willing  and  able  to  make  the  loan  on  a  good  title 
the  broker  is  entitled  to  his  commission  when,  after  that 
is  done,  the  borrower,  without  any  excuse,  declines  to 
complete  the  loan  which  he  had  engaged  the  broker  to 
obtain  for  him  and  prevents  the  loan  from  being  made  by 
making  the  loan  elsewhere. ' ' 42 

When  the  broker  secures  the  loan,  he  need  not  tender 
the  money  to  his  principal.  When  the  money  is  secured 
and  the  principal  is  notified  thereof,  it  becomes  his  duty 
to  act.43  Where  defendant  agreed  to  pay  a  broker  a  cer- 
tain amount  for  procuring  a  loan,  which  the  defendant 
refused  thereafter  to  accept,  the  defendant  may  prove 

as  West  v.  Stoeckel,  10  Am.  Law  Rec.   308   (CInn.   1882). 

38  Hotohklss  v.  Kuchler,  86  App.  Div.  265  (N.  Y.  1903).  See  also  §  170  supra  as 
to  right  of  n  person  to  change  his  ground  or  reason. 

«o  See  §   1 85  supra. 

«  Steinmetz  v  Pancoast,  17  Phila.  185  (1884)  ;  Hackmann  v.  Gutweller,  66  Mo. 
App.  240  (1896). 

i-  Masterson  v.  Knights,  135  111.  App.  548  (1907),  (citing  Swlgart  v.  Hawley,  140 
111.  186;  Springer  v.  Orr,  82  111.  App.  558). 

"Telford  v.  BrinkerhofT,  45  111.  App.   586   (1892). 


204  COMMISSIONS   AND    THEIR   RECOVERY. 

that  the  broker  had  agreed  to  pay  the  lender  one-half  of 
the  commission,  and  such  one-half  must  be  deducted  in 
arriving  at  a  verdict  for  the  broker  on  the  principle  that 
a  recovery  for  breach  of  contract  must  be  confined  to  the 
actual  loss  sustained.  The  broker  cannot  derive  a  greater 
advantage  from  a  breach  than  from  a  performance.44 

§  195.    Amount  of  Commissions  on  Loan. 

The  question  of  the  amount  of  the  commissions  is 
taken  up  later.45  There  is  also  given  in  Part  VII  of  the 
present  volume  the  rates  charged  in  the  larger  cities.46  It 
may  be  also,  that  the  amounts  of  commissions  are  regu- 
lated by  statute  or  ordinance  in  particular  localities,  and 
the  local  statutes  and  ordinances  should  be  consulted. 

In  New  York,  for  instance,  a  statute  formerly  regu- 
lated the  subject  with  respect  to  loans.  In  this  state, 
prior  to  April  27,  1895,  the  amount  of  commissions  on 
loans  was  restricted  to  fifty  cents  on  each  $100,  or,  in 
other  words,  one-half  of  one  per  cent,  upon  the  amount  of 
the  loan.  Although  the  statute  was  not  generally  ob- 
served in  real  estate  loan  matters,  yet  it  was  enforced  if 
insisted  on  by  the  borrower.47  Under  this  statute  it  was 
said  that  "  it  may  be  allowable  to  pay  for  extra  services 
not  usually  necessary  in  procuring  loans,  in  addition  to 
the  prescribed  brokerage;  but  it  should  be  separated  so 
that  it  may  be  seen  whether  the  compensation  is  reason- 
able, or  only  a  cover  for  demanding  a  larger  commis- 
sion."48 

By  Chapter  467  of  the  Laws  of  1895,  loans  on  real  es- 
tate security  were  excepted  from  the  statute.49 

««  Finek  v.  Pierce.   53  Misc.  554   (N.  Y.   1907). 

«  See  Ch.  XXII  infra. 

*»  See  Forms   1-16  infra,   Ch.   XXXVIII. 

«  Anderson  v.  Dwyer,  61  N.  Y.  Suppl.  1114  (1699);  aff'd,  63  N.  Y.  Suppl.  201 
(1900)  ;  30  Misc.  (N.  Y.)  793. 

<»Cook  v.    Phillips,   56  N.   Y.   310    (1874). 

"Vol.  1.  Cummlngs  &  Gilbert's  General  Laws.  Ed.  of  1901.  p.  430:  now  §  380  of 
the  General  Business  Law,  which  is  Ch.  20  of  the  Cons.  Laws  of  New  York. 


CHAPTER  XX. 
COMMISSIONS  ON  LEASES. 

§  196.    General  Statement. 

In  some  jurisdictions  it  is  held  that  the  commissions 
on  a  lease  procured  by  a  broker  are  not  earned  until  the 
lease  is  negotiated,  or  a  valid  contract  for  a  lease  has  been 
executed.  But  a  failure  of  the  lease  due  to  the  landlord's 
misstatements  or  unreasonable  requirements  will  not  de- 
feat the  broker's  claim  for  commissions.  (§  197.) 

The  general  requirements  for  recovery  of  commissions 
for  procuring  a  lease  are  the  same  as  in  the  case  of  com- 
missions on  a  sale.  (§  198.) 

A  tenant  is  not  liable  to  the  broker  for  commissions 
unless  some  service  has  been  performed  at  his  request  by 
the  broker.  (§  199.) 

The  broker's  commission  for  procuring  a  lease  is 
usually  a  percentage  upon  the  agreed  rental  though  some- 
times a  percentage  on  the  values  involved.  (§  200.)  The 
failure  of  a  lease  does  not  ordinarily  affect  the  broker's 
right  to  commissions  (§  201),  as  the  landlord  has  a 
remedy  against  the  tenant  for  unpaid  rents,  and  the 
broker  cannot  be  held  responsible  for  the  landlord's  fail- 
ure to  collect.  (§  202.) 

§  197.    When  Broker's  Obligations  are  Performed. 

In  regard  to  leases,  as  in  the  case  of  sales  and  loans,1 
there  is  a  conflict  of  opinion  as  to  when  the  broker  is 
deemed  to  have  performed  his  obligation.  In  New  York 
it  is  held  that  where  a  broker  undertakes  to  procure  a 

»See  §§  117-119,  185  supra. 

205 


206  COMMISSIONS   AND   THEIR   RECOVERY. 

person  to  take  a  lease  of  the  owner's  property,  he  cannot 
recover  until  he  establishes  that  he  has  earned  his  com- 
missions either  by  negotiating  a  lease  or  procuring  the 
execution  of  a  valid  and  binding  agreement  for  such  a 
lease.  It  is  not  sufficient  that  the  parties  were  brought 
together  in  a  negotiation,  unless  that  negotiation  ended 
in  a  lease  or  a  valid  agreement  for  one.  This  is  so  held 
in  Crombie  v.  Waldo,  137  N.  Y.  129  (1893),  where  there 
seems  to  have  been  nothing  further  than  the  usual  under- 
taking of  a  broker  in  similar  matters,  but  the  court  as- 
sumed that  the  broker  entered  upon  an  employment  to 
procure  a  tenant  to  take  a  lease  of  the  defendant 's  prem- 
ises, and  undoubtedly  that  is  what  a  broker  in  such  cases 
undertakes. 

But  in  the  same  case 2  it  is  said  that  the  actual  execu- 
tion of  a  lease  in  every  case  is  not  necessary.  Thus, 
where  real  estate  brokers  are  duly  employed  by  a  land- 
lord and  procure  a  tenant  who  agrees  to  every  term  and 
condition  originally  proposed  by  the  landlord  so  that  the 
minds  of  the  parties  meet,  but  no  lease  is  signed,  owing 
to  the  landlord's  insistence  on  new  and  unreasonable 
terms,  the  brokers  are  entitled  to  commissions,3  and  this 
is  also  so  where  the  lease  fails  on  account  of  misstate- 
ments  made  to  the  prospective  tenant.4 

In  Mears  v.  Jones,  102  Me.  490  (1907),  there  is  a  dic- 
tum to  the  effect  that  to  earn  his  commission  it  is  enough 
for  the  broker  to  secure  one  willing  to  become  a  tenant 
upon  the  principal's  terms,  and  bring  him  to  the  prin- 
cipal for  acceptance  as  such. 

§  198.    General  Requirements  for  Recovery  of  Commis- 
sions. 

All  the  usual  requirements  as  to  recovery  of  commis- 

»  Crombie  v.  Waldo,   137  N.   T.   120   (1893K 

'Tanenbanm  v.   Boehm,    126  App.   Dlv.   731    (N.   Y.   1908). 

•Washbura  v.  Bradley,   169  Mass.  86  (1897).     See  also  §§  172-174  supra. 


COMMISSIONS   ON   LEASES.  207 

sions  must  be  met  to  entitle  the  broker  to  recover  his 
commissions  for  negotiating  a  lease.  He  must  show  em- 
ployment, express  or  implied,  as  well  as  the  other  essen- 
tials.5 A  custom  to  the  effect  that  where  brokers  nego- 
tiate a  lease  the  owner  pays  the  commission,  cannot 
fasten  upon  a  property  owner  any  liability  as  the  em- 
ployer of  a  broker,  simply  because  this  owner  consents 
to  let  his  property  to  a  tenant  who  is  induced  to  lease  it 
through  the  agency  of  the  broker  without  any  request, 
express  or  implied,  on  the  part  of  the  owner.6 

§  199.    Liability  of  Tenant  for  Commissions. 

Where  a  broker  comes  to  the  tenant  apparently  as  the 
agent  of  the  landlord,  and  after  negotiations  are  begun, 
states  that  the  landlord  will  pay  no  commissions,  a  prom- 
ise on  the  tenant's  part  to  pay  the  commissions  is  with- 
out consideration,  unless  there  can  be  found  either  an 
employment  of  the  broker  by  the  tenant,  or  the  perform- 
ance by  the  broker  of  some  service  at  the  request,  ex- 
press or  implied,  of  the  tenant.7 

§  200.    Amount  of  Commissions  for  Procuring  Lease. 

A  subsequent  chapter  is  devoted  to  a  consideration  of 
the  amount  of  commissions.8  The  rates  charged  in  the 
larger  cities  appear  in  Part  VII  of  the  present  volume." 
From  the  lists  there  given  it  will  be  seen  that  the  bro- 
ker's charge  is  usually  a  percentage  on  the  agreed  rental, 
although  in  some  instances  the  charge  is  based  on  a  per- 
centage on  the  value  of  the  ground,  or  on  the  appraised 
value  of  the  property  or  otherwise.  As  to  this  latter 
method  it  was,  however,  said  in  Daube  v.  Nessler,  50  111. 

See  Ch.  IX  supra. 

Brady  v.  American  Mach.  Co..  88  App.  Dlv.  269  (N.  Y.  1903). 

Myers  v.   Dean.   132  N.  Y.  65   (1892).     See  also  §  121  supra. 

See  Ch.  XXII  infra. 

See  Forms    1-16  infra,   Cb.   XXXVIII. 


208  COMMISSIONS   AND   THEIR   RECOVERY. 

App.  166  (1892):  "It  is  absurd  to  suppose  that  com- 
missions for  services  in  negotiating  a  lease  can  be  meas- 
ured by  the  value  of  the  fee,  regardless  of  the  terms  of 
the  lease ;  the  same  for  a  term  of  one  year  as  for  ninety- 
nine." 

Where  the  broker's  commissions  are,  by  agreement, 
fixed  at  a  specified  amount,  there  would,  of  course,  be 
neither  occasion  nor  right  to  resort  to  charging  the  cus- 
tomary rates.10  Or  where,  as  is  sometimes  done,  the 
agreement  is  made  that  the  broker  is  to  get  all  above  a 
certain  specified  rental,  the  broker  is  entitled  to  nothing 
unless  the  lease  he  obtains  provides  for  a  sum  in  excess 
of  that  named,  and  he  is,  of  course,  entitled  to  all  in  ex- 
cess of  the  agreed  amount.  Where  the  agreement  was, 
"All  you  get  above  $2,000  per  year  you  may  have  as 
your  commission,"  and  the  broker  obtained  a  five-year 
lease  at  a  rental  of  $2,200  per  year,  the  agreement  was 
construed  to  mean  that  the  broker  gets  nothing  unless 
the  annual  rent  of  the  tenant  he  secures  is  over  $2,000 ; 
but  beyond  this  that  he  is  entitled  to  the  excess  over 
$2,000  per  annum  for  the  life  of  the  lease,  and  not  only 
to  the  excess  of  the  first  year's  rental.11 

§  201.    Effect  of  Failure  of  Lease. 

As  stated  in  §  172,  and  the  other  sections  there  re- 
ferred to,  the  failure  of  a  customer  to  perform  his  con- 
tract does  not  affect  the  broker's  commissions.  In  other 
words,  when  applied  to  procuring  a  lease,  it  means  that 
when  the  landlord  and  the  tenant  produced  by  the  broker 
have  entered  into  a  lease,  the  full  commissions  are 
earned,  and  the  failure  of  the  tenant  to  subsequently 
carry  out  the  lease  will  not  affect  the  broker's  right  to 
retain  or  recover  his  full  commissions,  unless,  of  course, 

»  See  §5  213,  222  infra. 

u  Goldstein  v.   D'Arcy,   201   Mass.   312    (1909). 


COMMISSIONS    ON    LEASES.  209 

the  landlord  and  the  broker  had  agreed  otherwise.  Thus 
in  Mears  v.  Jones,  102  Me.  490  (1907),  the  broker  pro- 
cured a  lease  for  five  years  subject  to  the  landlord's  right 
to  terminate  the  same  if  he  meanwhile  sold  the  property, 
the  lease  also  giving  the  tenant  the  first  right  or  option 
to  purchase  at  the  same  figure  which  the  landlord  might 
be  offered  by  any  other  prospective  purchaser.  At  the 
end  of  the  second  year  the  property  was  sold  to  the  ten- 
ant's  wife  and  the  question  was  then  presented  whether 
the  broker  was  entitled  to  commissions  for  the  three 
years  following  the  sale  of  the  property. 

The  court  said:  "  The  commission  of  a  real  estate 
broker  is  usually  understood  to  be  a  certain  percentage 
upon  the  consideration  paid,  or  offered  to  be  paid  or  re- 
ceived. In  the  case  of  a  sale,  the  problem  is  easy.  The 
consideration  is  a  single  amount.  In  the  case  of  a  lease 
with  annual  rentals  for  a  specified  term,  it  would  be  rea- 
sonable to  expect  that  the  amount  of  commissions  would 
depend,  in  some  respects,  at  least,  upon  the  length  of  the 
term  contracted  for.  It  would  not  be  natural  to  expect 
that  the  parties  understood  that  so  large  a  commission 
would  be  earned  in  securing  a  lease  for  one  year  as  one 
for  five  years.  And  that  the  parties  in  this  case  under- 
stood that  the  commission  was  earned  and  was  to  become 
payable  in  annual  installments,  is,  we  think,  reasonably 
to  be  inferred  from  the  annual  payments  made  while  the 
lease  was  in  force.  And  we  agree  with  the  plaintiff  that 
he  was  entitled  to  annual  commissions  for  the  full  term 
of  the  lease.  But  what  was  the  full  length  of  that  lease? 
We  think  it  was  not  for  five  seasons  absolutely.  It  was 
for  five  seasons  unless  the  property  was  sold  in  the  mean- 
time. It  was  a  lease  for  five  seasons,  but  determinable 
by  a  sale  within  that  term.  It  was  made  determinable 
by  the  very  lease  which  the  plaintiff  procured.  He  there- 
fore did  not  procure  a  lease  for  full  five  seasons,  but  a 
lease  which  might  lawfully  end  sooner.  He  is  entitled  to 


210  COMMISSIONS   AND    THEIK    KECOVEBY. 

his  earnings  for  the  kind  of  a  lease  he  secured.  He  was 
employed  to  get  a  tenant  for  one  or  more  years.  The 
longer  the  term  he  secured,  the  greater  the  amount  of 
rentals,  and  naturally  the  larger  the  amount  of  his  com- 
missions in  the  whole.  He  took  the  chances  of  sale.  It 
matters  not  that  the  limitation  in  the  lease  was  for  the 
defendant's  benefit,  and  may  have  been  made,  as  it  prob- 
ably was,  at  the  defendant's  direction.  If  it  was  so  lim- 
ited at  the  instance  of  the  defendant,  it  was  just  the  same 
kind  of  a  lease  which  the  plaintiff  undertook  to  procure 
and  did  procure.  And  the  amount  of  the  rentals  which 
was  the  consideration  of  the  lease,  and  which  naturally 
would  be  the  basis  of  commissions,  would  vary  according 
to  the  length  of  time  which  should  elapse  before  the  lease 
was  determined  by  sale. ' ' 

§  202.    Operation  of  Rule  as  to  Failure  of  Lease. 

As  a  practical  proposition,  the  rule  that  commissions 
for  the  full  term  of  a  lease  are  earned  when  the  lease  is 
signed,  regardless  of  any  subsequent  failure  on  the  part 
of  the  tenant,  may  sometimes  work  a  hardship  on  the 
landlord,  as  he  may  have  paid  or  be  compelled  to  pay  the 
broker  more  for  his  commissions  than  he  collects  rent 
from  the  tenant,  should  the  tenant  fail  to  pay  his  rent 
under  the  lease.  As  a  legal  proposition,  however,  the 
landlord  has  his  remedy  against  the  tenant  by  suit  to 
collect  the  rent  as  it  becomes  due,  as  long  as  the  lease 
runs  and  the  property  fails  to  bring  the  rental  agreed  on 
in  the  lease.  If  the  tenant  is  financially  irresponsible 
and  judgment  against  him  would  be  uncollectible,  the 
situation  is  still  the  same.  The  law  gives  the  landlord  a 
remedy  by  suit,  but  the  law  does  not  guarantee  success- 
ful collection  of  any  judgment  obtained  by  the  remedy. 
Moreover,  the  landlord  having  entered  into  the  lease  with 
the  tenant,  the  former  is  deemed  to  have  accepted  the 


COMMISSIONS   ON   LEASES.  211 

latter  as  satisfactory,  and  if  the  landlord  has  not  satis- 
fied himself  of  the  financial  standing  of  the  proposed 
tenant  before  entering  into  the  lease,  he  has  himself  to 
blame.12 

Further,  in  some  states,  New  York  for  one,  if  the  land- 
lord dispossesses  the  tenant  for  non-payment  of  rent, 
such  dispossess  puts  an  end  to  the  lease  unless  the  lease 
specifically  provides  to  the  contrary.13  And  the  provi- 
sion in  the  lease  to  the  contrary  must  be  explicit.  Hav- 
ing dispossessed  the  tenant  and  thus  put  an  end  to  the 
lease,  the  landlord  cannot  recover  any  rent  subsequently 
accruing,  unless,  as  stated,  the  lease  specifically  so 
allows. 


«  See  §§  1P3-155  supra. 

M  N.  Y.  Code  of  Civil  Procedure,  §  2253. 


CHAPTER  XXI. 
WHO  IS   LIABLE   FOR   COMMISSIONS. 

§  203.    General  Statement. 

As  a  general  rule,  the  person  who  engages  the  broker 
is  liable  for  the  commissions.  (§  204.) 

A  mere  promise  to  pay  commissions  may,  under  some 
circumstances,  create  no  liability.  (§  205.) 

Persons  not  owning  the  property  may  become  liable 
for  the  commissions  if  they  engage  the  broker.  (§  206.) 

Persons  acting  in  a  representative  capacity,  such  as 
trustees,  executors,  or  guardians,  engaging  a  broker,  are 
personally  liable  for  his  commissions.  (§  207.) 

While  generally  it  is  the  vendor  who  pays  the  com- 
missions, the  purchaser  may  become  liable  therefor  by 
special  agreement  or  where  he  engages  the  broker  to  buy. 
(§§  208-210.) 

§  204.    The  Employer  is  Usually  Liable  for  Broker's 
Commissions. 

As  a  general  rule,  the  person  who  engages  the  broker 
is  liable  for  the  commissions  if  the  broker  brings  about  a 
sale.  While,  generally,  the  owner  of  the  property— that 
is,  the  vendor— either  himself  or  through  an  agent  en- 
gages the  broker,  and  is,  therefore,  liable  for  the  com- 
missions,1 it  is  not  at  all  necessary  that  the  broker  should 
show  that  the  person  he  seeks  to  hold  is  the  owner  of  the 
property.2  In  all  cases,  the  broker  must,  of  course,  show 

»  Downing  T.   Buck,   135  Mich.  638   (1904). 
*  See  $   206   infra. 

212 


WHO    IS    LIABLE    FOB    COMMISSIONS.  213 

that  the  necessary  prerequisites  exist  which  entitle  him 
to  commission.3 

Where  the  vendor,  by  means  of  fraud,  secures  the 
broker's  release  of  his  claim  for  full  commissions,  the 
broker  may  still  recover  the  amount,  less  what  he  has 
already  received.4  Where  the  question  is  as  to  which  of 
a  set  of  brokers  is  entitled  to  the  commissions,  the  collu- 
sion of  the  principal  with  one  set  of  brokers  to  defeat 
the  commissions  of  the  other,  is  material.5 

Where  the  separate  owners  of  distinct  parts  of  an  en- 
tire tract  jointly  employ  a  broker  to  sell  the  whole  tract, 
an  action  may  be  maintained  by  such  broker  against  all 
jointly,  but,  if  such  contract  be  not  proved,  the  suit  may 
fail  upon  the  general  issue.6 

§  205.    Promises  to  Pay  Commissions. 

Without  an  employment,  or  the  performance  by  the 
broker  of  some  service  at  the  request,  express  or  implied, 
of  the  principal,  a  promise  by  the  latter  to  pay  commis- 
sions has  no  consideration  for  its  support,  and  no  liability 
to  pay  is  created  by  it.7  And  even  where  the  owner  actu- 
ally promises  to  pay  the  broker  commissions,  under  the 
belief  that  the  broker  was  the  procuring  cause  of  the  sale, 
he  may  nevertheless  resist  payment,  and  successfully  too, 
if  in  fact  the  broker  was  not  the  procuring  cause.8 

An  admission  by  the  owner  that  the  broker  is  entitled 
to  a  commission  may  be  considered  as  evidence.9  And 
acknowledging  in  the  contract  an  indebtedness  to  the 
broker  to  the  amount  of  his  customary  commission  may 
be  taken  as  an  admission  that  the  sale  was  effected 

»  See  Ch.   IX.   supra. 

«  Bowe  v.   Oage.    112   N.   W.  4C9    (WIs.   1907);    12  L.   R.   A.    (N.   S.)    265. 

B  Haven  v.  Tarter,   124  Mo.  App.  691   (1907).     See  also  §§  97,  98  tvpra. 

•  McOill   v.    Pressley.   02   Ind.   193    (1878). 

t  Myers   v.   Dean,    132  N.   Y.   71,   72    (1892). 

8  Belleshelm  v.  Palm.  54  App.  Dlv.  77  (N.  Y.  1900).  As  to  consideration  for  prom- 
ise to  pay  broker  though  he  is  not  successful,  see  Klrnmel  v.  Skelly,  130  Cal.  555 
(1900). 

»  Metcalfe  v.   Gordon,   86  App.   Div.   370  (N.  Y.   1903). 


214  COMMISSIONS   AND   THEIE   RECOVERY. 

through  the  agency  of  the  broker.10  But  a  clause  in  the 
contract  between  vendor  and  vendee  as  to  how  and  by 
whom  the  commission  is  to  be  paid,  is  not  a  contract  with 
the  broker  for  the  payment  of  the  commission.11  And 
where  the  promise  to  pay  commission  is  made  after  the 
sale  is  already  consummated  there  is  said  to  be  no  con- 
sideration for  the  promise.12  And  so  it  has  been  said  in 
New  Jersey  that  in  the  absence  of  a  written  contract  of 
employment,  as  required  by  the  New  Jersey  statute,  a 
subsequent  promise  to  pay  commission  is  without  consid- 
eration.13 

1  'By  a  written  contract  for  the  sale  of  real  estate  the 
vendee  agreed  *  to  pay  all  commissions  or  brokerage  aris- 
ing by  reason  of  the  sale  of  said  property.'  The  title 
proved  defective,  and  the  contract  was  never  performed. 
In  an  action  against  the  vendee  for  commissions  plaintiff 
alleged  that  the  vendor  employed  him  to  sell  the  property 
on  condition  that  the  vendee  should  pay  the  commission, 
and  that  defendant,  with  knowledge  of  this  fact,  agreed 
to  pay  plaintiff's  commission.  Held,  that  plaintiff  had 
no  cause  of  action  on  the  contract  between  the  vendor 
and  vendee;  he  could  only  recover  on  defendant's  oral 
agreement  with  him;  and  testimony  was  admissible  that 
defendant  agreed  to  pay  his  commission  only  if  the  title 
proved  good."14 

§  206.    Liability  of  Persons  Not  Owning  the  Property. 

The  fact  that  the  party  who  employs  the  broker  is  not 
the  owner  of  the  property  does  not  relieve  him  from  lia- 
bility for  broker's  commissions.15  "It  is  matter  of  com- 
mon knowledge  that  in  the  business  world  men  do 

MRedfield  Y.  Tegg,  38  N.  Y.   214   (1868). 
»  Barber  v.   Hildebrand,   42  Nebr.  405   (1894). 
"Wolverton   v.   Tuttle,    94   Pac.    963    (Ore.    1908). 
"Lelmbach  v.  Regner,  70  N.  J.  L.  609,  610   (1904). 

"Headnote  in  Bab  v.  Hirschbein,  12  N.  Y.  Suppl.  730  (1891).  See  also  §  209 
infra. 

«  Sanchea  v.   Yorba,   97  Pac.   205    (Cal.    1908). 


WHO    IS   LIABLE    FOR    COMMISSIONS.  215 

frequently  obtain  what  are  termed  options  upon  real  prop- 
erty—that is  to  say,  the  right  to  purchase,  and  then  em- 
ploy brokers  to  negotiate  a  sale  at  an  enhanced  price,  the 
title  being  all  the  while  in  others.  *  *  *  A  may  possess 
such  knowledge  as  justifies  him  in  his  judgment  in  con- 
tracting to  sell,  or  in  contracting  with  a  broker  to  sell  for 
him,  or  to  find  a  purchaser  for  property  which  he  does 
not  own.  If  he  does  so,  without  so  guarding  his  agree- 
ment as  to  save  himself  in  case  of  failure  to  secure  title 
to  the  thing  he  has  authorized  to  be  sold,  he  cannot  be 
heard  to  complain  of  the  result  of  his  own  folly  or  lack 
of  foresight."18 

A  broker  is  not  required  to  search  his  customer's  title 
to  the  property,  but  may  assume  that  the  customer's  title 
thereto  is  perfect.  He  relies  upon  his  employment,  and 
his  only  duty  is  to  comply  with  the  terms  thereof  by  pro- 
ducing a  purchaser  ready,  willing  and  able  to  take  the 
property  upon  the  vendor's  terms.17  Where  title  is  in 
the  wife,  and  the  husband  puts  the  property  in  the 
broker's  hands  for  sale  without  disclosing  the  fact  that 
he  is  acting  as  agent  for  his  wife,  the  husband  may  be 
held  for  the  commission.18  This  is  on  the  ground  stated, 
that  a  person  may  become  liable  to  the  broker  for  his 
commission  even  though  that  person  is  not  the  owner  of 
the  property. 

If  a  person  places  property  in  the  hands  of  a  broker 
for  sale,  and  employs  the  broker  to  sell  it  without  at  the 
same  time  stating  that  he  is  not  really  the  owner  but  only 
acting  for  the  owner,  that  person  becomes  liable  for  the 
commission,  even  though  the  broker  afterwards  discovers 
that  the  person  was  only  acting  for  the  owner.  Thus  in 
Whiting  v.  Saunders,  23  Misc.  332  (N.  Y.  1898),  the  wife 
of  the  defendant  Saunders  owned  the  property.  The  de- 

18  Martin  v.   Ede,    103  Cal.    161    (1894). 

'•  Ilarrell  v.  Veith,  13  N.  Y.  St.  Rep.  738  (1888).  See  Chap.  XI,  j§  117-119 
supra,  ax  to  conflict  of  opinion  as  to  when  the  broker's  obligation  Is  performed. 

wjarvis  v.  Schaefer,  105  N.  Y.  289  (1887);  Rounds  v.  Alee,  116  Iowa  345  (1902). 


216  COMMISSIONS   AND    THEIR   RECOVERY. 

fendant  placed  it  in  the  plaintiff's  hands,  a  broker,  for 
sale.  There  was  some  dispute  as  to  whether  the  defend- 
ant told  the  broker  at  the  time  that  his  wife  owned  the 
property.  The  broker  drew  the  contract  when  he  se- 
cured a  purchaser,  and  the  contract  appears  to  have  been 
drawn  "Thorndike  Saunders,  attorney  for  Emma  Saun- 
ders,  party  of  the  second  part,"  and  it  was  claimed  that 
this  was  evidence  that  the  broker  knew  that  Saunders 
was  acting  for  his  wife.  In  the  lower  court  the  jury 
had  returned  a  verdict  for  the  broker  against  Saunders 
on  this  conflicting  proof. 

In  affirming  this  judgment,  the  court  (Appellate  Term 
of  the  Supreme  Court)  said  in  part:  "There  can  be  no 
doubt  that  plaintiffs  were  aware  of  defendant's  agency 
before  the  contract  of  exchange  or  sale  between  Mrs. 
Saunders  and  Mrs.  Boschen,  by  their  attorneys,  was  exe- 
cuted or  even  drawn  up;  but  we  are  of  opinion  that 
there  is  some  evidence  tending  to  show  that  plaintiffs  did 
not  know  of  defendant's  agency  until  after  they  had  un- 
dertaken the  employment  of  finding  a  purchaser  and  had 
brought  the  transaction,  practically,  to  a  close.  The 
subsequent  disclosure  of  the  principal  came  too  late,  for  a 
person,  contracting  as  agent,  will  be  personally  respon- 
sible, where,  at  the  tune  of  making  the  contract  (of  brok- 
erage), he  does  not  disclose  the  fact  of  his  agency  but 
treats  with  the  other  party  as  being  himself  the  princi- 
pal; for  in  such  case  it  follows,  irresistibly,  that  credit 
is  given  to  him  on  account  of  the  contract.  He  must  dis- 
close the  fact  that  he  is  acting  only  as  agent,  in  order  that 
the  other  party  may  determine  whether  he  will  accept 
the  responsibility  of  the  principal  in  the  transaction.  See 
Ashner  v.  Abenheim,  19  Misc.  288;  Story  Ag.,  §  266." 

When  a  husband  acts  for  his  wife  in  the  management 
or  disposition  of  her  property,  and  when  his  action  nat- 
urally tends  to  accomplish  her  known  wishes  in  regard  to 
it,  it  needs  but  little  evidence  to  warrant  an  inference 


WHO   IS   LIABLE  FOB  COMMISSIONS.  217 

that  the  action  was  authorized  by  her.19  "A  wife  may 
act  as  the  agent  of  her  husband,  and  if  he  permits  her  so 
to  act  in  any  particular  transaction,  he  adopts  and  is 
bound  by  her  acts  and  admissions,  and  they  may  be  given 
in  evidence  against  him;  and  a  subsequent  acknowledg- 
ment or  ratification  of  her  acts  by  the  husband  must  be 
*  evidence  of  and  equivalent  to  an  original  au- 
thority."20 

§  207.    Trustees,  Executors  and  Guardians. 

A  person  acting  in  a  representative  capacity,  such  as 
trustee,  executor  or  guardian,  is  personally  liable  for  the 
broker's  commission.21  As  stated  in  Hickman  v.  Leg- 
gett,  100  Pac.  1072  (Cal.  1909),  "It  is  well  settled  that  an 
executor  or  administrator  cannot  create  any  liability 
against  the  estate  in  his  charge  by  his  employment  of 
attorneys,  brokers  or  others  to  assist  him  in  the  perform- 
ance of  his  duties.  The  attorney,  broker,  or  other  per- 
son employed  has  no  action  or  claim  against  the  estate. 
Whatever  claim  he  has,  whether  it  be  absolute  or  condi- 
tional, is  against  the  executor  or  administrator  in  his 
individual  capacity,  who,  in  turn  may,  if  the  expenditure 
was  made  in  good  faith  and  was  proper,  be  credited 
therewith  in  the  settlement  of  his  accounts  with  the  es- 
tate." 

One  of  two  trustees  who  employs  a  broker  to  find  a 
purchaser  for  the  trust  real  estate,  is  liable  in  his  indi- 
vidual capacity  upon  the  contract  of  employment,  and 
the  other  trustee  need  not  be  made  a  party  defendant.22 
Where  an  executor  employs  the  broker,  the  executor  is 

">  Simes  v.    Rockwell,    156  Mass.   372    (1892). 

»  Hopkins  v.   Mollinieux,   4   Wend.   465    (N.    Y.    1830). 

» McGovern  v.  Bennett.  146  Mich.  562  (1906),  (citing  Packard  T.  Klngman,  109 
Mich.  497;  Lathrop  v.  Duffleld,  134  Mich.  485;  Jones  v.  Dawson,  19  Ala.  672;  Johnson 
T.  Leman.  131  111.  609;  7  L.  R.  A.  656;  Truesdale  v.  Ins.  Co.,  63  Minn.  49;  Mitchell 
T.  Whitlock,  121  N.  C.  166;  Worrall  v.  Harford.  8  Ves.  4;  Strickland  v.  Symons.  L.  R. 
26  Chan.  Div.  245;  3  Pomeroy  on  Eq.  Jurs.,  §  1085). 

22  Diamond  v.   Wheeler,   80  App.   Div.   58   (N.   Y.   1903). 


218  COMMISSIONS   AND    THEIK    EECOVERY. 

individually  liable  for  his  commission.23  Where  it  is 
sought  to  hold  persons  liable  as  executors,  there  should 
be  proof  that  they  had  power  of  sale,  and  in  the  absence 
of  proof  that  they  could  act  otherwise  than  jointly,  an 
employment  of  a  broker  by  one  of  several  executors  does 
not  bind  the  others.24  A  guardian  is  personally  liable 
for  broker's  commissions.25 

§  208.    Commissions  from  Purchaser. 

In  the  usual  course  of  business,  it  is  the  seller  and  not 
the  purchaser  who  pays  the  commission,26  and  to  charge 
the  purchaser  with  liability  requires  satisfactory  proof 
of  a  special  contract  to  that  effect,27  or  it  may  arise  from 
the  fact  that  the  purchaser  employed  the  broker  to  find 
the  property,  as  distinguished  from  the  cases  in  which 
the  broker  is  engaged  by  the  vendor  to  sell  the  property. 

Special  contracts  by  which  the  purchaser  undertakes 
the  payment  of  commission  are  not  unusual.  Where  in 
such  a  case  the  vendee  by  the  contract  of  sale  agreed  with 
the  vendor  to  pay  the  broker's  commissions,  it  is  said 
that  the  assumption  to  pay  was  based  upon  the  vendor's 
compliance  with  the  terms  of  the  contract  and  his  trans- 
fer of  the  title  to  the  premises,  and  if  the  contract  falls 
short  of  being  performed,  as  where  the  court  decided 
that  the  vendor's  title  was  defective,  the  obligation  im- 
posed by  the  assumption  falls  with  it  in  so  far  as  the 
vendee  is  concerned.28 

This  determines  the  question,  however,  merely  be- 
tween vendor  and  vendee.  The  broker  would  still  have 

Mpollatschek  v.  Goodwin,  17  Misc.  591  (N.  Y.  1896).  See  also  Wilson  y.  Mason, 
158  111.  312  (1895). 

«*  Guthmann  v.  Meyer,  31  Misc.  810  (N.  Y.  1900).  And  as  to  the  power  to  pur- 
chase and  Invest,  see  Wilson  v.  Mason,  158  111.  312,  313  (1895).  As  to  liability  of 
executor,  as  such  or  Individually,  on  employment  of  broker  to  procure  a  mortgage  loan 
on  the  estate  property,  see  McMahon  v.  Smith,  136  App.  Div.  839  (N.  Y.  1910). 

as  Myers  v.  Cohen,  4  Misc.  185  (N.  Y.  1893),  (citing  Douglass  v.  Leonard,  44  St. 
Rep.  293;  Johnson  v.  Leman,  19  Am.  St.  67). 

2«  Downing  v.   Buck,    135  Mich.   638    (1904). 

™  Freeman  v.   Polstein,   49  Misc.   644    (N.   Y.    1906). 

*»  Eckel  v.  Spltzer,  58  Misc.  467    (N.   Y.   1908).     See  also  §  205  supra. 


WHO    IS   LIABLE   FOR   COMMISSIONS.  219 

his  remedy  against  the  vendor,  unless  he  had  uncondi- 
tionally released  the  vendor  and  agreed  to  look  to  the 
vendee  alone  for  his  commissions,  which  would  raise  the 
question  whether  a  novation  had  been  created. 

§  209.    Purchaser's  Promise  to  Pay  Commission. 

Where  the  property  is  given  to  an  agent  to  sell,  and 
he  proposes  it  to  a  buyer,  and  the  latter  requests  the 
broker  to  do  nothing  further  but  to  permit  the  purchaser 
to  deal  directly  with  the  owner,  and  promises  to  pay  the 
broker  a  commission  if  he  buys  the  property,  the  pur- 
chaser is  liable  for  the  commission  if  he  buys  the  prop- 
erty. Such  an  agreement  does  not  imply  bad  faith  on 
the  broker's  part,  if  all  the  terms  are  fixed  and  the  broker 
has  no  discretion.29 

And  when  the  broker,  upon  request  of  the  owner, 
initiates  the  negotiation  which  eventuates  in  the  sale,  but 
subsequently  remains  silent  upon  the  promise  of  the  pur- 
chaser to  pay  his  commission  in  full,  thereby  inducing  the 
owner  to  rely  upon  the  purchaser's  certification  that 
there  was  no  broker's  commission,  and  to  fix  the  purchase 
price  accordingly,  it  furnishes  a  consideration  for  the 
purchaser's  promise  to  pay  the  commissions.30 

Where  the  seller  refuses  to  sell  unless  the  broker 
waives  any  claim  against  him  for  commission,  and  the 
vendee  then  promises  to  pay  the  broker  if  he  waives  all 
claim  against  the  seller,  the  vendee  is  liable  for  the  prom- 
ised amount,  and  this  irrespective  of  whether  the  broker 
had  a  valid  claim  for  commission  against  the  vendor.31 

And  where  the  vendor  released  the  vendee  from  his 
contract  of  purchase,  a  promise  by  the  latter  in  such 
event  to  pay  the  broker's  commissions  which  the  vendor 

=•  Slegel  v.  Rosenzweig,  129  App.  Dir.  547  (N.  Y.  1909).  See  also  Ch.  XIII,  tupro, 
as  to  good  faith  of  broker. 

"Abraham  v.  Goldberg.  C  Misc.  43   (N.  Y.   1893). 

»  Cole  v.   Mendenhall,   117  App.   Div.  786  (N.  Y.  1907). 


220  COMMISSIONS    AND    THEIR    RECOVERY. 

had  incurred,  is  founded  upon  a  sufficient  consideration. 
And  it  seems  this  is  so  whether  or  not  the  contract  from 
which  the  purchaser  was  released  would  have  been  en- 
forceable.32 If  a  proposed  purchaser  promises  to  pay 
the  commission  in  case  he  purchases,  because  the  vendor 
would  pay  no  commission,  and  the  property  is  subse- 
quently sold  to  a  third  party  who  in  turn  sells  to  the  pro- 
posed purchaser,  the  question  whether  the  commission 
was  earned  should  be  submitted  to  the  jury.33 

§  210.    Broker  Employed  by  Purchaser. 

Where  a  real  estate  broker  is  employed  to  buy  real 
estate,  he  earns  his  commission  when  he  has  in  good  faith 
brought  to  his  employer  a  seller  who  makes  a  written 
contract  with  him  for  the  sale  of  the  property,  and  it  is 
no  answer  to  his  claim  for  commission  against  such  em- 
ployer, that  the  seller  could  not  make  perfect  title,  and 
was  therefore  unable  to  carry  out  his  contract  of  sale.34 
Likewise,  where  the  broker  is  employed  by  the  purchaser, 
but  with  the  understanding  that  he  should  receive  his 
pay  from  the  vendor,  a  refusal  on  the  purchaser's  part  to 
comply  with  the  contract  to  purchase,  by  reason  of  which 
the  broker  is  deprived  of  his  commissions,  renders  the 
intending  purchaser  liable  for  the  damages  thereby  in- 
flicted on  the  broker.35 

"It  would  seem  to  be  immaterial  whether  in  the 
original  negotiation  or  the  sale  the  plaintiff  (the  broker) 
was  the  agent  of  the  vendor  or  the  purchaser.  The  com- 
plaint here  is  for  the  violation  of  the  contract  to  pur- 
chase, from  which  violation  damages  directly  result  to 
plaintiff."36  Where  a  person  agrees  to  pay  a  broker 

a2  Brown  v.  Jennett,  106  N.  W.  747  (Iowa  190G)  ;  s.  c.,  5  I,.  R.  A.  (N.  S.)  725. 
See  also  §  205  supra. 

M  Mutchnlck   v.    Friedman,    135  App.   Div.    356    (N.   Y.    1909). 

>»  Knapp   v.   Wallace,   41    N.    Y.  477    (1869). 

»Livermore  v.  Crane.  26  Wash.  529;  57  L.  R.  A.  401  (1901).  (citing  Bishop  T. 
Averlll.  17  Wash.  209 ;  49  Pac.  237 ;  50  Pac.  1024 ;  Cavendar  v,  Waddinghara,  2  Mo. 
App.  551;  Atkinson  v.  Pack,  114  N.  C.  597;  19  S,  E,  028), 

»•  Livermore  v.  Crane,  supra. 


WHO   IS   LIABLE   FOR   COMMISSIONS.  221 

a  commission  if  he  succeeds  in  getting  an  owner  to  sell 
to  the  purchaser  at  a  price  named,  and  the  broker  suc- 
ceeds in  so  doing,  he  is  entitled  to  his  commission  from 
the  proposed  purchaser,37  notwithstanding  the  pur- 
chaser refuses  to  take  the  property  because  he  is  unable 
to  get  a  reduction  in  the  price.38 

The  fact  that  a  purchaser  who  employed  a  broker  to 
negotiate  a  sale  for  him,  takes  the  contract  and  the  deed 
in  his  wife's  name,  does  not,  of  itself,  deprive  the  broker 
of  his  compensation.  Whether  he  is  to  be  treated  as  the 
actual  purchaser  or,  as  agent  for  his  wife,  an  undisclosed 
principal,  the  question  of  his  liability  is  for  the  jury  and 
not  for  the  court.39 


w  Branson  v.  Blair.  97  S.  W.  337  (Tex.  1906). 

ss  Michaelis  v.    Hoffmann,   37  Misc.  830    (N.   Y.   1902). 

»Bloch  v.   Lowe,  51  Misc.  8   (N.   Y.   1906). 


CHAPTER  XXII. 
AMOUNT  OF  COMPENSATION. 

§  211.    General  Statement. 

Where  the  amount  of  commissions  is  expressly  agreed 
upon,  the  broker  is  entitled  to  the  agreed  amount.  (§§ 
212-218.)  Where  no  rate  or  special  mode  of  compensa- 
tion has  been  agreed  on,  the  broker  is  entitled  to  the  cus- 
tomary rate.  (§  219.) 

A  custom  or  usage,  when  it  is  reasonable,  uniform, 
well  settled  and  not  contradictory  to  fixed  rules  of  law 
or  the  express  terms  of  the  agreement,  is  generally 
deemed  to  form  a  part  of  the  contract.  ( §§  219,  220.)  A 
custom,  to  bind  the  parties,  must  either  be  known  to  them 
or  must  be  so  general  that  they  must  be  supposed  to  have 
contracted  with  reference  to  it.  (§§  221,  222.)  A  cus- 
tom may  be  established  by  presumptive  as  well  as  by  di- 
rect evidence.  (§§  223,  224.)  Rules  of  real  estate 
boards  are  binding  upon  members  but  not  upon  non- 
members,  unless  such  rules  are  established  as  a  custom. 
(§  225.) 

In  the  absence  of  an  agreed  amount,  or  of  a  custom 
fixing  the  rate,  the  broker  is  entitled  to  the  fair  value  of 
his  services.  (§  226.) 

§  212.    Commissions.    How  Fixed. 

The  amount  of  the  broker's  compensation  is  fixed  by 
(1)  express  agreement  of  the  parties;  (2)  custom;  or  (3) 
by  the  reasonable  value  of  his  services.1 

»Knans  v.  K.  B.  Co.,  142  N.  Y.  77  (1894);  Walker  Mfg.  Co.  v.  Knox,  136  Fed. 
339  (1905);  Jones  v.  Moore,  30  Ky.  Law  Rep.  605  (1907). 

222 


AMOUNT   OP   COMPENSATION.  223 

§  213.    Agreed  Compensation. 

Sometimes  brokers  name  a  fixed  amount  as  their 
compensation.  When  this  is  done  and  agreed  to  by  the 
broker's  employer,  it  constitutes  an  express  agreement. 
An  express  agreement,  however,  need  not  necessarily 
specify  a  fixed  sum.  It  is  an  express  agreement  if  the 
broker  and  his  employer  agree  that  the  broker  shall  have 
as  his  compensation  all  in  excess  of  a  fixed  sale  price,2  or 
that  the  broker  shall  have  a  certain  part  of  the  " profits" 
on  a  sale.  When  the  broker  has  an  express  agreement 
as  to  his  compensation,  such  agreement  controls  in  case 
the  broker  brings  about  a  deal.  Such  situations  are  gov- 
erned by  the  rules  applicable  to  all  contracts.  Where 
there  is  a  valid  express  contract,  there  is  no  place  for  re- 
covery on  a  quantum  meruit.3 

Where  on  buying  property  the  principal  agreed  to 
pay  the  broker  a  part  of  the  profits  when  he  sold,  and  no 
time  for  a  sale  was  fixed,  it  was  held  that  the  principal 
or  his  representatives  could  not  refuse  absolutely  to  sell; 
that  a  sale  must  be  made  within  a  reasonable  time,  and 
that  after  repudiation  of  the  broker's  rights  he  was  en- 
titled to  recover  his  part  of  the  "profits"  in  cash,  based 
upon  the  then  value  of  the  land,  less  the  amounts  which 
would  be  properly  chargeable  against  a  sale  price  before 
the  net  profit  could  be  arrived  at.4 

§  214.    Measure  of  Compensation. 

Where  the  seller  causes  a  breach  of  the  contract  of 
employment  and  the  broker  is  entitled  to  damages  on  ac- 
count thereof,  the  measure  of  damages  is  either  the  com- 
mission agreed  upon,  or  reasonable  compensation  for  the 

*  See  §§  215-218  infra. 

'Reams  v.  Wilson,  147  N.  C.  304  (1908),  (citing  Heed  y.  Reed,  82  Pa.  St.  420; 
Phelan  v.  Gardner.  43  Cal.  306;  Doty  v.  Miller.  43  Barb.  529;  Bailey  v.  Chapman.  41 
Mo.  537;  Monroe  v.  Snow,  131  111.  136;  Breckenrldge  v.  Clarldge,  43  L.  B.  A.  593). 

«  Kauffman  v.   Balllle,  89  Pac.  548   (Wash.  1907). 


224  COMMISSIONS   AND    THEIR   RECOVERY. 

broker's  services.5  And  it  has  been  held  that  where  a 
broker  contracted  to  sell  land  at  a  specified  price  for  an 
agreed  commission  of  five  per  cent.,  but  a  sale  was  made 
to  the  broker's  purchaser  by  the  principal  for  less  than 
the  price  specified  in  the  agreement,  the  broker  was  not 
entitled  to  recover  the  agreed  commission  but  was  only 
entitled  to  receive  reasonable  compensation.6 

A  broker  may  also  in  effect,  by  his  conduct  or  other- 
wise, waive  his  right  to  commissions  which  he  has  earned. 
As  an  illustration,— where  a  certain  amount  is  agreed 
upon  as  commission  in  case  a  sale  is  made,  and  the  broker 
makes  the  sale  but  his  principal  refuses  to  complete,  the 
commissions  are  earned,  but  if  the  broker  thereafter 
makes  efforts  to  again  sell  the  property  for  his  principal 
without  demanding  the  commissions  already  earned,  the 
broker  on  making  a  subsequent  sale  is  not  entitled  to 
commissions  for  the  first  sale  but  only  on  the  second.7 

§  215.    All  in  Excess  of  Fixed  Price. 

It  is  not  unusual  for  persons  to  list  property  with 
brokers  and  fix  a  net  sale  price,  the  brokers  to  retain  as 
their  compensation  all  they  can  secure  in  excess  of  this 
net  price.  When  such  an  arrangement  is  entered  into, 
it  should  not  be  allowed  to  rest  on  a  mere  understanding 
or  oral  agreement  between  the  owner  and  the  broker. 
On  the  contrary,  an  explicit  agreement  should  be  entered 
into,  showing  conclusively  that  the  broker  is  to  receive 
for  his  compensation  all  he  gets  above  a  certain  price,  as 
distinguished  from  the  not  uncommon  arrangement  un- 
der which  a  broker  is  merely  authorised  to  sell  at  a  price 
not  less  than  a  fixed  sum.  The  difference,  which  is  ma- 
terial, is  discussed  in  the  following  section. 

8  Dal  v.  Fischer,   107  N.  W.  534   (S.   D.   1906). 
« Schultz   v.   Zelman,    111   S.   W.    776    (Tex.    1908). 
7Deford   v.    Shepard,   6   Kans.    App.   428    (1897). 


AMOUNT   OF   COMPENSATION.  225 

§  216.    Agreements  for  All  in  Excess  of  Fixed  Price. 

Commission  agreements  for  "all  in  excess  of  a  fixed 
price"  should,  as  stated,  be  as  explicit  as  possible. 
Losses  to  the  broker  or  to  the  vendor  may  result  from 
disregard  of  this  caution. 

If  the  intention  is  to  permit  the  broker  to  have  all  in 
excess  of  a  fixed  sale  price  as  his  compensation,  and  this 
is  not  clearly  expressed,  the  courts  may  adopt  a  construc- 
tion of  the  agreement  quite  fatal  to  the  broker.  For  ex- 
ample, in  an  Arkansas  case  where  the  owner  of  land  au- 
thorized a  broker  to  sell  her  property  at  "$3  per  acre  net 
to  her, ' '  it  was  held  that  this  would  not  entitle  the  broker 
to  all  he  could  get  in  excess  of  the  specified  amount,  but 
that  it  meant  that  the  land  must  bring  to  the  owner  $3 
per  acre  over  and  above  all  expenses  and  deductions; 
that  the  specification  of  the  amount  was  only  a  limita- 
tion of  the  broker's  power  to  sell;  that  it  was  still  his 
duty  to  sell  the  land  for  the  highest  price  obtainable  and 
to  account  to  the  owner  for  the  proceeds,  less  a  compen- 
sation not  greater  than  the  excess  of  the  purchase  money 
over  $3  per  acre  net,  and  at  the  same  time  not  exceeding 
a  reasonable  compensation.8 

The  same  ruling  has  been  applied  in  other  juris- 
dictions. Thus,  where  property  was  listed  with  a 
broker  at  a  fixed  sum  net  to  the  vendor,  the  intention  was 
held  to  be  that  the  property  should  bring  him  the  fixed 
amount  free  of  all  expenses,  and  not  that  the  brokers 
should  receive  as  compensation  all  the  purchase  money 
above  the  fixed  sum.  In  this  case,9  the  court  said:  "We 
do  not  mean  to  hold  that  if  the  real  estate  brokers  who 
are  plaintiffs  in  this  case  had  alleged  an  express  contract 
that  *  *  *  they  might  have  as  compensation  for  their 
services  all  that  they  might  sell  the  property  for,  above 

sBoysen  v.  Robertson,  70  Ark.  5«   (1902);  s.  c.,  68  S.  W.  243. 
•  Matheney  v.    Godln,    130   Ga.   713    (1908),    (citing  Turnley   v.    Michael,    15  S.   W. 
(Tex.)   912). 


226  COMMISSIONS   AND    THEIR    RECOVERY. 

a  fixed  sum,  they  would  not  be  entitled  to  such  excess  as 
compensation  for  their  services,  in  case  they  procured  a 
purchaser.  But  where  the  owner  agrees  with  brokers 
for  them  to  sell  property  for  a  named  amount  'net  to  him' 
such  language  will  not  be  held  to  import  by  implication 
a  contract  to  allow  the  brokers,  as  a  fee  or  profit,  all  of 
the  purchase  price  in  excess  of  the  sum  so  named. ' ' 

On  the  other  hand,  if  it  is  merely  intended  to  give  the 
broker  a  net  price  which  is  to  be  the  lowest  selling  price, 
it  is  equally  fatal  to  the  land  owner  if  the  language  used 
may  be  construed  to  mean  that  the  broker  may  retain 
as  his  compensation  all  above  the  net  price.  Agreements 
of  the  latter  nature  are,  as  already  said,  legitimate,  and 
as  will  be  seen,  enforced.  The  intention  should  therefore 
be  expressed  so  clearly  that  no  adverse  construction  is 
possible. 

§  217.    Rule  as  to  All  in  Excess  of  Fixed  Price. 

Where  the  broker  is  given  a  net  sale  price,  and  is  to 
retain  for  his  compensation  all  he  may  secure  in  excess 
of  such  net  price,  he  is  not,  of  course,  entitled  to  compen- 
sation if  he  brings  about  a  sale  for  a  price  only  equal  to 
or  less  than  the  net  price.  Thus,  where  the  vendor 
agrees  to  take  a  stated  amount  "net,"  all  above  such 
amount  to  belong  to  the  broker  for  his  commission,  the 
broker  can  claim  no  commission  from  the  vendor  where 
he  procured  a  purchaser  for  the  net  amount  only.10 

On  the  other  hand,  he  may  legally  claim  all  he  secures 
in  excess  of  such  net  price.  "When  lands  are  placed  in 
the  hands  of  a  broker  for  sale  at  a  net  price  to  the  owner, 
with  the  understanding  that  his  commission  or  compen- 
sation depends  entirely  upon  what  he  may  be  able  to  get 
for  the  land  over  and  above  the  net  price  to  the  owner, 
he  is  entitled  to  the  excess  for  which  he  sells."  n 

wwolverton  v.  Tuttle.  94  Pac.  963   (Ore.   1908).     See  also  §  232  infra, 
"Jeffries  v.  Bobbins,   66  Kans.   436   (1903). 


AMOUNT   OP   COMPENSATION.  227 

In  other  words,  where  the  broker  is  to  receive  for  his 
commission  all  in  excess  of  a  fixed  price,  he  can  claim 
commissions  only  in  the  event  he  procures  a  purchaser 
at  a  price  in  excess  of  the  fixed  amount ;  the  excess  being 
the  measure  of  his  commission.12 

Where  the  broker  is  to  get  all  or  a  part  of  all  above 
a  certain  price  per  acre  or  a  certain  price  in  gross,  the 
amount  of  the  mortgage  on  the  property  purchased 
should  be  considered  a  part  of  the  price  paid  when  arriv- 
ing at  the  net  amount  received  by  the  seller,  and  upon 
which  the  commissions  are  to  be  computed,  at  least  it  has 
been  so  held  where  nothing  was  said  about  any  mortgage 
in  the  written  employment  of  the  broker.13 

§  218.    Rule  as  to  All  in  Excess  of  Fixed  Price  when 
Vendor  Intervenes. 

When  the  broker  is  to  sell  for  a  net  price  and  keep 
the  excess  and  secures  a  purchaser  at  a  price  in  excess  of 
the  net  price,  and  the  owner  sells  to  the  purchaser,  know- 
ing him  to  be  the  broker's  client,  the  owner  is  liable  to 
the  broker  for  a  commission  equal  to  the  difference  be- 
tween the  net  price  and  the  price  the  purchaser  was 
ready,  willing  and  able  to  pay  to  the  agent  for  the  prop- 
erty.14 

If  the  broker's  purchaser  to  whom  the  vendor  sells 
the  property,  in  fact  agreed  to  pay  more  than  the  fixed 
amount,  and  the  vendor  is  informed  of  that  fact  before 
completing  the  sale,  and  he  takes  a  less  sum,  the  vendor 
is  liable.15 

Where  an  owner  agreed  to  give  the  broker  all  above 
$1,400  obtained  for  his  property,  and  also  agreed  not  to 

« Holcomb  v.  Stafford,  102  Minn.  233  (1907).  (citing  Antlsdel  T.  Canfield,  119 
Mich.  229;  77  N.  W.  944;  Beatty  v.  Busseli,  41  Nebr.  321;  59  N.  W.  919;  Ames  v. 
Lamont,  107  Wis.  531 ;  83  N.  W.  780).  See  also  Beaumont  v.  Samson,  90  Pac.  839 
(Cal.  1907). 

«  Hobart  v.  Stewart,  99  Minn.   394    (1906). 

"Church    v.    Dunham,    14   Idaho   776    (1908). 

16  Holcomb   v.    Stafford,    102   Minn.   233    (1907). 


228  COMMISSIONS  AND   THEIR   RECOVERY. 

sell  the  property  without  giving  the  broker  notice,  and 
the  broker  brought  a  customer  for  $1,500  and  learned,  it 
then  being  February,  that  the  owner  had  sold  the  prop- 
erty in  January  for  $1,350  without  notice  to  the  broker, 
it  was  held  that  this  being  a  valid  express  contract,  there 
was  no  place  for  a  recovery  on  quantum  meruit,  and  that 
the  broker  was  entitled  to  recover  the  stipulated  com- 
pensation amounting  to  $100.16 

§  219.    Compensation  in  Absence  of  Agreement. 

"Where  a  broker  has  been  employed  and  no  rate  or 
special  mode  of  compensation  has  been  agreed  on,  the 
customary  rate  forms  the  proper  rule  of  value  for  his 
services." 17  Under  such  circumstances  he  is  entitled  to 
a  reasonable  compensation,  evidence  of  which  is  the 
usual  and  customary  charge  for  making  such  sale.18 

It  is  not  unusual  for  brokers  to  say  nothing  at  all 
about  the  amount  of  their  compensation  when  the  prop- 
erty is  placed  with  them  for  the  purpose  of  selling  or 
renting  it.  In  such  case,  unless  a  fixed  compensation  is 
subsequently  agreed  upon,  the  broker  relies  on  recover- 
ing the  "customary"  compensation.  This  customary 
rate  may  vary  in  different  localities.19  Where  no  price 
is  fixed  and  the  broker  is  merely  instructed  to  get  an 
offer,  the  implied  agreement  is  that  the  owner  will  pay 
commissions  upon  the  sale  price  in  the  event  the  owner 
agrees  upon  a  figure  and  sells  to  some  person  introduced 
by  the  broker.20 

But  it  seems  that  in  an  exchange  where  the  values  of 
both  properties  have  been  purposely  inflated,  the 

"Reams  v.  Wilson,  147  N.  C.  305  (1908),  (citing  Reed  v.  Reed,  82  Pa.  St.  420; 
Phelan  Y.  Gardner,  43  Cal.  306;  Doty  v.  Miller,  43  Barb.  529;  Bailey  v.  Chapman,  41 
Mo.  537;  Monroe  v.  Snow,  131  111.  136;  Brackenridge  v.  Claridge,  43  L.  R.  A.  593). 

« Erben  v.  Lorillard,  2  Keyes  572  (N.  Y.  Court  of  Appeals,  1866)  ;  Monroe  v. 
Snow,  131  111.  136  (1890). 

"Jones  v.   Moore,   30   Ky.    Law   Rep.   605    (1907). 

'•See   Schedules   of  Rates,   Forms   1-16  infra,  Part   VIII. 

20  Martin  v.  Fegan,  95  App.  Div.  157  (N.  Y.  1904). 


AMOUNT   OF   COMPENSATION.  229 

broker's  percentage  should  be  based  on  the  real  value 
of  the  property.21 

§  220.    Custom  as  Part  of  the  Agreement. 

Parties  are  presumed  to  contract  in  reference  to  the 
custom  or  usage  of  the  particular  place  or  trade  in  or  as 
to  which  they  enter  into  agreement,  when  the  custom  or 
usage  is  so  far  established,  and  so  far  known  to  the  par- 
ties that  it  must  be  supposed  that  their  contract  was 
made  in  reference  to  it.22 

"Custom  or  usage  relating  to  a  particular  business 
in  order  to  be  available  for  the  purpose  of  determining 
the  rights  of  the  parties  must  be  uniform,  notorious  and 
reasonable. ' ' 23  Every  legal  contract  is  to  be  interpreted 
in  accordance  with  the  intention  of  the  parties  making  it. 
A  custom  or  usage  when  it  is  reasonable,  uniform,  well 
settled,  not  in  opposition  to  fixed  rules  of  law,  not  in  con- 
tradiction of  the  express  terms  of  the  contract,  is  gener- 
ally deemed  to  form  a  part  of  the  contract,  and  to  enter 
into  the  intention  of  the  parties.24 

In  Heistand  v.  Bateman,  41  Colo.  23  (1907),  it  was 
said:  "Evidence  of  custom  may  be  resorted  to  for  the 
purpose  of  ascertaining  the  meaning  and  intent  of  parties 
to  a  contract  where  the  terms  employed  are  general  in 
their  nature.  Experience  has  taught  that  men  of  affairs, 
in  making  contracts,  are  not  always  careful  to  express 
themselves  with  completeness  and  particularity,  and  that 
in  dealing  with  one  another,  they  leave  part  of  their  in- 
tention unexpressed,  in  silent  reliance  on  the  usages  mu- 
tually understood,  to  enter  into  and  form  a  part  of  their 
agreement.25  Hence,  it  follows,  that  when  such  a  con- 

21  Porter   v.    Hellingsworth,   30   Misc.   628    (N.   Y.    1900)  ;   02  N.   Y.   Suppl.   796. 

--Walls  Y.  Bailey,  49  N.  Y.  469  (1872);  Steidtmann  v.  Lay  Co.,  234  111.  84 
(  1908). 

-3  Heistand  v.  Bateman.  41  Colo.  22  (1907),  (citing  Savage  v.  Pelton,  1  Colo. 
A|.]i.  148;  Leach  v.  Perkins,  17  Me.  462). 

-><  Walls  v.   Bailey,   49   N.   Y.   469    (1872). 

^Citing  29  Am.  &  Eng.  Enc.  Law   (2d  Ed.),  422. 


230  COMMISSIONS   AND    THEIR   RECOVERY. 

tract  becomes  the  subject  of  litigation,  the  presumption 
is  indulged,  if  the  parties  have  not  expressed  a  contrary 
intention,  that  they  intended  to  incorporate  therein  a 
usage  known  to  them,  and  evidence  of  such  is  admissible, 
not  to  vary  or  contradict  the  terms  of  the  contract,  but 
to  interpret  it,  as  it  was  understood  by  the  parties  at  the 
time  it  was  made. ' '  M 

A  custom  that  where  brokers  negotiate  a  lease  the 
owner  pays  the  commission,  cannot  fasten  upon  a  prop- 
erty owner  any  liability  as  the  employer  of  a  broker  sim- 
ply because  he  consents  to  rent  his  property  to  some  one 
who  is  induced  to  lease  it  through  the  agency  of  the 
broker  without  any  request,  express  or  implied,  on  the 
part  of  the  owner.27 

A  custom  between  brokers  to  divide  commissions, 
gives  no  right  of  recovery  in  the  absence  of  an  agreement 
to  divide  or  of  facts  from  which  such  agreement  may  be 
implied.28 

§  221.    Custom  and  Usage  Denned. 

''Strictly  speaking,  custom  is  that  length  of  usage 
which  has  become  law.  It  is  a  usage  which  has  acquired 
the  force  of  law. ' ' 29  The  words  ' l  custom ' '  and  ' '  usage ' ' 
are  often  used  as  convertible  terms.30 

§  222.    When  Custom  Binds  the  Parties. 

"A  custom  or  usage  which  binds  the  parties  to  a  con- 
tract does  so  only  upon  the  principle  either  that  they 
have  knowledge  of  its  existence  or  that  it  is  so  general 
that  they  must  be  supposed  to  have  contracted  with  ref- 
erence to  it."31  Where  a  usage  is  local,  its  existence 

20  Citing  29  Am.  &   Eng.  Enc.   Law   (2d  Ed.),  423,  et  »eq. 

**  Brady  v.  American  Mach.  Co.,  80  App.  Div.  269   (N.  Y.   1903). 

28  Hedenberg   v.    Seeberger.    140    111.   App.    618    (1908). 

28  Walls   v.    Bailey,  49   N.   Y.   471    (1872). 

»/<!.,   472. 

"Harris  v.  Tumbrldge,  83  N.   Y.  92,  100   (1880). 


AMOUNT   OF   COMPENSATION.  231 

must  be  clearly  proved  to  have  been  known  to  the  party 
sought  to  be  charged  thereby,  at  the  time.32  Not  only 
the  existence  of  a  usage,  but  whether  knowledge  of  it  ex- 
ists in  any  particular  case  is  a  question  of  fact  for  the 
jury.33  Evidence  of  usage  is  received  as  is  any  other 
parol  evidence,  when  a  written  contract  is  under  consid- 
eration.34 Some  cases  hold  that  the  custom  may  be 
proved  without  being  pleaded.35 

Where  there  is  an  express  contract  as  to  the  amount 
of  compensation,  and  the  contract  is  not  vague  or  uncer- 
tain, it  cannot  be  altered  or  affected  by  any  proof  of 
usage,  and  proof  of  custom  in  such  a  case  is  therefore  in- 
admissible.36 In  other  words,  where  the  contract  covers 
the  point  involved,  proof  of  custom  as  to  such  point  is  not 
proper.37 

It  has  been  said  that  where  a  person  brings  about  a 
sale  and  attempts  to  recover  commissions  at  the  rate  usu- 
ally charged  by  brokers,  he  must  show  that  he  himself 
is  a  broker.38  In  another  case,39  it  was  said  that  "in  an 
action  for  reasonable  compensation  by  one  employed  to 
sell  real  estate,  and  who  effects  a  sale,  but  who  is  not 
regularly  engaged  in  that  business,  evidence  of  the  cus- 
tomary charges  of  real  estate  agents  for  such  services  is 
relevant;  but  such  customary  charges  are  not  conclusive 
in  fixing  the  compensation  of  the  person  making  such 
sale  in  such  circumstances.  '  '  40 

Again,  in  the  same  case  41  it  was  held  that,  '  '  The  right 
of  one  rendering  services  for  another  to  have  their  value 
estimated  under  a  quantum  meruit  upon  a  basis  of 


as  Higgins   v.    Moore,    34    N.    Y.    425    (1866). 

»  Walls    v.    Bailey,   49    N.    Y.    476    (1872). 

*•  Id.,   470. 

»  Slfidtmann  v.  Lay  Co..  234  111.  89  (1908).  As  to  pleading  custom,  see  Poland 
T.  Hollander.  62  Misc.  523  (N.  Y.  1909). 

••"Main  v.  Ragle.  1  E.  D.  Smith  619  (N.  Y.  1852);  Goldstein  v.  D'Arcy,  201  Mass. 
312  (1»09). 

87  Emery  v.  Atlanta  Exeh..  88  Oa.  326.  330  (1891),  (citing  Glbney  v.  Curtis,  61 
Md.  192;  Corbett  v.  Underwood.  83  111.  324;  Werner  T.  Footman,  54  Ga.  128). 

»»Main   v.    Eagle.    1   E.   D.   Smith  619   (N.    Y.    1852). 

»  Fleming   v.    Wells,    101    Pac.    66    (Colo.    1909). 

40  Citing  Kennerly  v.  SuinimTvllle.  <!i  Mo.  App.  75;  Erben  v.  Lorlllard,  41  N.  Y. 
567;  3  Sutherland  on  Damages  (3rd  Ed.),  451. 

«  Fleming  v.  Wells,   101   Pac.   66    (Colo.   1909). 


232  COMMISSIONS   AND   THEIR   RECOVERY. 

missions  can  only  arise  out  of  a  general  custom,  so  that, 
where  such  custom  exists  in  reference  to  certain  kinds  of 
business,  any  one  actually  or  presumptively  having 
knowledge  of  it,  and  employing  the  persons  engaged  in 
such  business  to  perform  services  in  their  line  without 
special  contract,  will  be  presumed  to  have  done  so  with 
reference  to  such  custom;  but  this  rule  only  obtains 
where  the  persons  employed  are  regularly  engaged  in  the 
business  to  be  transacted.42  Plaintiff  was  not  engaged  in 
the  real  estate  business,  so  it  cannot  be  assumed  that  de- 
fendants '  promise  to  recompense  her  for  the  services  she 
rendered  was  made  with  reference  to,  or  upon  the  basis 
of,  commissions  usually  charged  by  real  estate  brokers. 
In  such  circumstances  she  would  only  be  entitled  to  re- 
cover what  her  services  might  reasonably  be  worth  inde- 
pendent of  the  question  of  the  usual  commissions  charged 
by  brokers,  although  evidence  of  the  customary  commis- 
sions charged  by  real  estate  agents  would  be  relevant  to 
consider  in  fixing  the  value  of  her  services. ' ' 

§  223.    Ignorance  of  Custom. 

As  we  have  seen,  custom  is  a  usage  which  has  ac- 
quired the  force  of  law 43  and  ignorance  of  the  law  will 
not  excuse.  "A  general  custom  is  the  common  law  it- 
self, or  part  of  it. ' '  Such  a  general  custom  for  instance, 
as  days  of  grace  on  a  note  (now  abolished  in  some  states) 
so  pervaded  the  whole  commercial  world  that  it  was  uni- 
versally understood  to  enter  into  every  note.  In  such  a 
case  a  party  would  not  be  heard  to  say  that  he  was  igno- 
rant of  the  custom.44 

"  Doubtless  if  a  custom  is  ancient,  very  general  and 
well  known,  it  will  often  be  a  presumption  of  law  that 
the  party  had  knowledge  of  it.45  It  would  seem,  how- 

«  Citing  Dyer  v.   Sutherland,   75  111.  583. 

43  §  221  supra. 

"  Walls  v.   Bailey,  49  N.  Y.  472   (1872). 

«See  Steldtmann   v.   Lay  Co.,   234   111.   89   (1908). 


AMOUNT    OF    COMPENSATION.  233 

ever,  that  upon  principle,  for  a  party  to  be  bound  by  a 
local  usage,  or  a  usage  of  a  particular  trade  or  profession, 
lie  must  be  shown  to  have  knowledge  or  notice  of  its  ex- 
istence. *  "  Usage  is  engrafted  upon  a  contract  or  in- 
voked to  give  it  a  meaning,  on  the  assumption  that  the 
parties  contracted  in  reference  to  it;  that  is  to  say,  that 
it  was  their  intention  that  it  should  be  a  part  of  their 
contract  wherever  their  contract  in  that  regard  was  silent 
or  obscure.  *  *  No  usage  is  admissible  to  influence  the 
construction  of  a  contract  unless  it  appears  that  it  be  so 
well  settled,  so  uniformly  acted  upon  and  so  long  con- 
tinued as  to  raise  a  fair  presumption  that  it  was  known 
to  both  contracting  parties,  and  that  they  contracted  in 
reference  thereto.  There  must  be  some  proof  that  the 
contract  had  reference  to  it,  or  proof  arising  out  of  the 
position  of  the  parties,  their  knowledge  of 'the  course  of 
business,  their  knowledge  of  the  usage,  or  other  circum- 
stance from  which  it  may  be  inferred  or  presumed  that 
they  had  reference  to  it. ' ' 46 

1 '  The  principle  governing  particular  customs  or  trade 
usages  is  as  follows :  '  The  elements  of  antiquity  need  not 
be  shown  in  the  case  of  a  usage  or  custom  of  trades.  All 
that  is  required  is  to  show  that  it  is  established,  that  is, 
that  it  has  existed  a  sufficient  length  of  time  to  have  be- 
come generally  known. '  l  Particular  usages  and  customs 
of  trade  or  business  must  be  known  by  the  party  to  be 
affected  by  them,  or  they  will  not  be  binding,  unless  they 
are  so  notorious,  universal  and  well  established  that  his 
knowledge  of  them  will  be  conclusively  presumed.'  "47 

§  224.    Proof  of  Custom. 

Proof  of  the  custom  is  admissible  on  the  theory  that 
it  explains  an  ambiguity  in  the  agreement.48  In  Atkin- 

««  Walls  v.  Bailey,  49  N.  Y.  473,  474,  476  (1872).  See  §  224  infra,  as  to  proof  of 
custom. 

«Arkadelphla  Lbr.  Co.  v.  Henderson,  84  Ark.  389  (1907),  (citing  12  Cyc.  1034, 
1041;  and  Arkansas  cases). 

"Walls  v.  Bailey,  49  N.  Y.  468   (1872). 


234  COMMISSIONS   AND   THEIR   RECOVERY. 

son  v.  Truesdell,  127  N.  Y.  234  (1891),  the  rule  is  stated 
that  "parol  evidence  may  be  given  as  to  the  uniform, 
continuous  and  well-settled  usage  and  custom  pertaining 
to  the  matters  embraced  in  the  contract,  unless  such 
usage  and  custom  contravene  a  rule  of  law,49  or  alter  or 
contradict  the  expressed  or  implied  terms  of  a  contract 
free  from  ambiguity.*' 

A  custom  is  "to  be  established  or  negatived  in  all  its 
essentials  as  well  as  to  knowledge  as  to  any  other,  by  the 
same  character  and  weight  of  evidence  as  are  necessary 
to  maintain  other  allegations  of  fact.  It  may  be  estab- 
lished by  presumptive  as  well  as  by  direct  evidence.  Nor, 
on  the  other  hand,  is  it  exempt  from  the  difficulty  that  a 
presumption  may  not  prevail  against  direct  evidence  to 
the  contrary  of  it.  The  jury  may  presume,  from  all  the 
circumstances  of  the  case,  that  knowledge  or  notice  ex- 
isted. ' '  As  for  instance,  that  the  usage  existed  for  many 
years,  that  the  party  resided  at  the  place  where  the  cus- 
tom existed,  or  that  the  party  was  himself  of  the  trade  or 
profession  in  which  the  custom  existed.50 

"It  is  for  the  jury  then,  under  proper  instructions 
from  the  court,  to  take  all  the  evidence  in  the  case;  that 
as  to  the  existence,  duration  and  other  characteristics  of 
the  custom  or  usage,  and  that  as  to  the  knowledge  thereof 
of  the  parties ;  and  therefrom  to  determine  whether  there 
is  shown  a  custom  of  such  age  and  character,  as  that  the 
presumption  of  law  will  arise  that  the  parties  knew  of, 
and  contracted  in  reference  to  it,  or  whether  the  usage  is 
so  local  and  particular,  as  that  knowledge  in  the  party 
to  be  charged  must  be  shown  affirmatively  or  may  be 
negatived. ' ' 51 

A  single  act  or  transaction  is  not  enough  to  warrant 
the  inference  that  such  act  or  transaction  is  customary. 

*»  A  custom  contravening  a  positive  statute  Is  Invalid.  Deadwyler  v.  Karow,  131 
Ga.  227  (1908). 

»  Walls  v.  Bailey,  49  N.  Y.  476  (1872). 
"Walls  v.   Bailey,   49  N.   Y.   477    (1872). 


AMOUNT   OF   COMPENSATION.  235 

While  there  has  been  some  controversy  as  to  whether  a 
local  custom  may  be  shown  by  a  single  witness,  the  rule 
seems  to  have  been  settled  by  modern  decisions  that  the 
testimony  of  one  witness  may  be  sufficient.52  And  it  may 
be  proved  even  by  the  party's  own  testimony.53  To  es- 
tablish a  custom  it  is  not  necessary  that  all  the  witnesses 
on  both  sides  must  agree  about  it.  If  they  diifer  as  to  its 
existence  in  the  same  place  or  in  all  places  it  raises  a 
question  for  the  jury.54 

§  225.    Rules  of  Real  Estate  Boards. 

While  a  real  estate  board  may  undoubtedly  make 
rules  and  regulations  governing  and  binding  upon  its 
members,  they  are  not  binding  upon,  nor  can  they  be  en- 
forced against  non-members;  much  less  can  they  be  held 
to  constitute  a  rule  of  evidence  binding  or  controlling  the 
courts  in  the  trial  of  causes.  The  rules  of  a  real  estate 
board  do  not  establish  a  custom  or  usage,  for  to  do  so 
would  require  that  they  be  acted  upon  with  uniformity, 
and  be  so  generally  known  and  established  as  to  raise  a 
fair  presumption  that  they  were  known  to  the  contract- 
ing parties  so  that  they  may  be  assumed  to  have  con- 
tracted with  relation  to  them,  and  with  knowledge  of 
them.  It  would  also  be  necessary  to  show  that  the  rate 
established  by  such  a  rule  was  reasonable  and  customary 
for  such  services.55 

Courts  will  not  take  judicial  cognizance  of  the  rules 
of  a  board  of  brokers,  unless  they  are  rules  or  usages  of 
trade  and  commerce,  which  would  be  recognized  without 
their  adoption  by  any  particular  board  or  association. 

«2  Jones  v.  Herrick,  118  N.  W.  444  (Iowa  1908),  (citing  Southwest  Va.  M.  ft.  L. 
Co.  v.  Chase.  95  Va.  50;  27  S.  E.  826;  Robinson  v.  U.  S.  13  Wall.  363;  20  L.  Ed. 
Of,:!;  Vail  v.  Rice,  5  N.  Y.  155;  Partridge  v.  Forsyth,  29  Ala.  200;  3  Wlgmore  on  Ev., 
§  2053). 

63  Gleason  v.  Met.  St.  R.  Co..  99  App.  Dlv.  211  (1904).  See  also  Chambers  v. 
Peters,  30  Misc.  756  (N.  Y.  1900). 

"Dickinson  v.  City  of  Poughkeepsle,  75  N.  Y.  77   (1878).     See  also  §  226  infra. 

"Springer  v.  Stiltz,  133  111.  App.  551,  552  (1907),  (citing  Calland  v.  Trapet, 
70  111.  App.  228;  Blssell  v.  Ryan,  23  111.  566). 


236  COMMISSIONS  AND   THEIR   EECOVERY. 

The  party  who  relies  upon  such  rules  must  plead  them. 
"When  a  contract  is  entered  into  with  reference  to  rules 
of  that  character,  they  become,  in  effect,  special  terms  of 
the  contract,  and  they  must  be  averred  by  the  party  who 
claims  that  he  has  performed  the  contract  on  his  part  in 
accordance  with  such  rules,  or  that  the  other  party  has 
failed  to  comply  therewith. ' ' 56 

In  the  absence  of  a  special  contract,  a  real  estate 
broker  who  sells  a  leasehold  is  not  entitled  to  the  same 
commissions  as  if  he  had  sold  the  fee,  and  a  rule  of  a  real 
estate  exchange  allowing  commissions  on  the  full  value 
of  the  fee  under  such  circumstances  would  not  control 
the  situation  unless  it  were  proven  that  the  rule  was  of 
such  public  notoriety  that  the  principal  must  be  pre- 
sumed to  have  had  knowledge  of  it,  and  therefore  to  have 
dealt  expecting  to  be  bound  by  it.57 

§  226.    Compensation  in  the  Absence  of  Agreement  or 
Usage. 

Where  there  is  no  agreement  as  to  the  amount  of  com- 
mission and  no  custom  on  the  subject,  the  broker  is  en- 
titled to  what  his  services  are  reasonably  worth.  "The 
amount,  in  the  absence  of  a  contract  or  usage  fixing  it, 
must  as  in  other  cases,  be  what  the  services  were  fairly 
worth. " 58  "In  such  cases  the  common  course  is  to 
prove  what  price  or  sum  is  usually  or  customarily  paid 
for  services  of  the  kind  shown  to  have  been  rendered; 
and  it  is  no  objection  to  a  recovery  that  the  witnesses  dis- 
agree in  their  evidence  as  to  the  price  which  is  usually 
paid."59 

Where  the  plaintiff  claims  commissions  pursuant  to 
custom,  it  seems  that  evidence  on  his  behalf  of  the  rea- 

M  Goldsmith  v.   Sawyer,  46  Cal.   209    (1873). 

"  Groscup   v.    Downey,    105   Md.    273    (1907). 

«>Brlggs  v.   Boyd,   56  N.   Y.   289,   295    (1874). 

"»  Walker  Mfg.  Co.  v.  Knox,  136  Fed.  339  (1905).     See  also  §  224  supra. 


AMOUNT   OF    COMPENSATION.  '237 

sonable  value  of  his  services  is  nevertheless  likewise  ad- 
missible.60 But  where  he  sues  under  a  contract  fixing 
the  compensation,  evidence  of  the  value  of  the  services 
is  inadmissible.61 

In  an  action  brought  by  a  broker  to  recover  commis- 
sions, he  is  a  competent  witness  as  to  the  value  of  his  ser- 
vices as  broker.62 

wRublno  T.  Scott,  118  N.  Y.  662  (1889).  See  also  Fleming  v.  Wells,  101  Pac. 
66  (Colo.  1909),  referred  to  In  §  222  supra. 

« Fordtran  v.  Stowers,  113  S.  W.  631  (Tex.  1908).  See  also  Reams  v.  Wilson, 
147  N.  C.  304  (1908),  which  cites  other  authorities,  as  Indicated  In  S  218  supra. 

« Chambers  T.   Peters,  30  Misc.   756   (N.   Y.   1900). 


CHAPTER   XXIII. 
WHEN   COMMISSIONS   ARE   DUE. 

§  227.    General  Statement. 

Commissions  are  due  when  the  broker  has  been  the 
procuring  cause  of  the  sale.  (§  228.) 

The  courts  are  quite  unanimous  that  the  broker's 
commissions  are  not,  unless  expressly  so  agreed,  depend- 
ent upon  the  actual  closing  of  title  or  upon  payment  for 
the  property  sold.  (§§  228,  229.) 

After  a  broker's  commissions  are  earned,  his  subse- 
quent agreement  to  wait  for  payment  until  title  is  closed 
or  until  the  happening  of  some  other  event,  is  not  bind- 
ing, unless  supported  by  some  real  consideration. 
(§  230.)  But  such  an  agreement  is  valid  if  made  before 
the  commission  is  earned  (§  231),  and  such  contingent 
agreements  are  subject  to  the  terms  thereof.  (§  232.) 

Agreements  providing  that  commissions  are  to  be 
paid  at  the  " closing  of  title"  are  construed  to  mean  on 
the  day  when  the  title  was  agreed  to  be  closed,  and  such 
commissions  are  not  defeated  by  the  principal 's  inability 
to  close  the  sale  due  to  his  defective  title.  ( §  §  233,  234. ) 

When  land  is  sold  on  the  instalment  plan,  the  broker's 
commissions,  unless  otherwise  agreed,  are  earned  and 
due  when  the  sale  is  made.  ( §  235.) 

§  228.    Rule  as  to  When  Commissions  Are  Due. 

Conceding  that  all  the  essentials  exist  which  entitle 
the  broker  to  his  commissions,1  there  remains  to  be  de- 

»See  Ch.  IX  gvpra. 

238 


WHEN   COMMISSIONS   ARE   DUE.  239 

termined  the  question,  When  are  the  commissions  due? 
While  it  is  impossible  to  formulate  a  rule  for  all  occa- 
sions, the  general  statement  may  be  made  that  commis- 
sions are  due  when  the  broker  has  been  the  procuring 
cause  of  the  sale. 

As  has  been  seen,2  the  courts  are  not  harmonious  as 
to  just  when  the  broker  may  claim  to  be  the  procuring 
cause  of  a  sale.  In  some  jurisdictions  the  broker  is  not 
regarded  to  have  been  the  procuring  cause  until  he  pro- 
cures an  enforceable  contract  of  sale.  Where  that  rule  pre- 
vails, the  commissions  are  not  due  until  such  contract 
has  been  procured.  As  the  broker's  obligation  under 
the  usual  employment  does  not  require  him  to  see  that 
the  contract  is  carried  out,  he  may  under  the  rule  just 
stated,  claim  his  commission  upon  the  execution  of  the 
contract.3 

Other  jurisdictions  hold  to  a  somewhat  different  view 
as  to  when  the  broker  is  the  procuring  cause  of  the  sale. 
This  view,  which  is  by  far  the  more  generally  recognized, 
is  that  the  broker  is  the  procuring  cause  of  the  sale  and 
his  commissions  therefore  become  due  and  payable  upon 
the  production  of  a  purchaser,  ready,  willing  and  able  to 
purchase  upon  his  employer's  terms.  As  a  greater  va- 
riety of  questions  usually  present  themselves  under  this 
rule  than  under  the  one  first  stated,  the  several  sections 
immediately  following  are  devoted  to  a  presentation  of 
authorities  of  more  or  less  consequence  dealing  only  with 
the  latter,  and,  as  has  been  said,  more  generally  recog- 
nized rule. 

Although  there  are  authorities,  notable  mostly  on  ac- 
count of  their  scarcity,  which  hold,  in  effect,  that  the 
broker  is  not  entitled  to  his  commission  until  the  actual 
consummation  of  a  sale  by  the  delivery  of  the  deed  and 
the  payment  of  the  purchase  price,4  yet  under  either  of 

*§§   117-119  supra. 

•  See  §  229  infra. 

*  See  Cb.  XI  supra. 


240  COMMISSIONS   AND    THEIR   RECOVERY. 

the  rules  above  stated,  the  commissions  are,  of  course, 
due  when  the  broker  produces  a  person  who  enters  into 
an  enforceable  contract  with  the  vendor.5  Where  a  con- 
tract of  sale  is  executed  between  the  employer  and  the 
purchaser,  the  right  of  the  broker  to  his  commissions 
does  not  depend  upon  the  performance  of  the  contract 
by  the  purchaser.6 

If  from  a  defect  in  the  title  of  the  vendor,  or  from  a 
refusal  to  consummate  the  contract  upon  the  part  of  the 
purchaser  or  for  any  reason  in  no  way  attributable  to  the 
broker,  the  sale  falls  through,  nevertheless  the  broker 
is  entitled  to  his  commissions  for  the  simple  reason  that 
he  has  performed  his  contract.7 

§  229.    Requirements  of  an  Earned  Commission.8 

Excluding  now  any  present  consideration  of  the  con- 
flict of  opinion  referred  to  in  the  preceding  section,  and 
confining  the  discussion  to  what  has  been  said  to  be  the 
prevailing  rule,  it  may  be  stated  that  the  duty  assumed 
by  the  broker  is  to  bring  the  minds  of  the  buyer  and  seller 
to  an  agreement  for  a  sale  on  the  price  and  terms  under 
which  it  is  to  be  made,  and  until  that  is  done  his  right  to 
commissions  does  not  accrue.9  But,  in  order  to  entitle 
the  broker  to  commission,  under  this  rule,  it  is  not  neces- 
sary that  a  contract  of  sale  should  actually  have  been 
executed,  or  that  some  note  or  memorandum  of  the  sale 
should  be  made  in  writing.  He  is  entitled  to  his  com- 
mission upon  the  production  of  a  purchaser  ready,  will- 
ing and  able  to  purchase  the  property  upon  the  terms 
fixed  by  the  seller.10  And  without  a  special  agreement 

8  Brady  v.  Foster,  72  App.   Div.  416   (N.   Y.    1902). 
•Pinkerton   v.    Hudson,    113   S.    W.    35    (Ark.    1908). 

7  Brady  v.  Foster,  supra.     See  Ch.  XVI  supra,   "  Failure  of  Principal  to  Complete," 
and  Ch.  XVII  supra,   "  Failure  of  Customer  to  Complete." 

8  See  §  228  supra,  as  to  scope  of  this  section. 

8  Rae  Co.   v.   Kane,   132  App.   Div.  935    (N.   Y.   1909). 

w  Mooney  v.  Elder,  56  N.  Y.  238  (1874)  ;  Flower  v.  Davidson,  44  Minn.  46  (1890)  ; 
Hinds  v.  Henry,  36  N.  J.  L.  332  (1873)  ;  Monroe  v.  Snow,  131  111.  136  (1891),  (citing 
McGavock  v.  Woodlief,  28  How.  221;  Doty  v.  Miller,  43  Barb.  (N.  Y.)  529;  Bailey  v. 
Chapman.  41  Mo.  537). 


WHEN    COMMISSIONS   ARE   DUE.  241 

or  understanding11  that  the  commissions  are  to  be  paid 
out  of  the  purchase  money  received  by  the  seller,  the 
broker  is,  under  this,  the  prevailing  rule,  entitled  to  his 
commissions  when  he  produces  the  purchaser,12  ready, 
willing  and  able  to  purchase  upon  the  principal's  terms. 

"It  is  not  the  duty  or  obligation  of  an  ordinary  broker 
to  see  to  it  that  the  seller  has  a  good  title,  or  that  he  en- 
ters into  an  enforceable  contract;  his  duty  is  done  when 
he  has  brought  a  purchaser  who  is  ready,  willing  and 
able  to  purchase  upon  the  conditions  named  by  the  seller, 
and  when  this  is  done  his  commissions  are  earned."  13 

Under  this  rule,  which,  as  stated,  is  the  prevailing 
rule,  when  the  broker  produces  a  purchaser,  able  and 
willing  to  purchase  on  the  owner's  terms,  but  the  sale 
falls  through  on  account  of  serious  encroachments  which 
the  owner  failed  to  disclose  either  to  the  broker  or  to  the 
purchaser  until  the  parties  meet  to  sign  the  contract,  the 
broker  is  entitled  to  recover  his  commissions.14 


§  230.    Unsupported  Agreements  to  Wait  for  Commis- 
sion. 

While  the  broker  may  by  special  agreement,  so  con- 
tract as  to  make  his  compensation  depend  upon  the  ac- 
tual signing  of  a  contract,  or  upon  the  actual  passing  of 
title,  or  upon  other  contingencies,15  yet  a  broker  who  has 
fully  earned  his  commission  is  generally  not  bound  by 
any  subsequent  agreement  that  no  commission  is  to  be 
paid  unless  the  deed  passes,  for  such  an  agreement  is 
without  consideration  and  cannot  affect  the  obligation  of 
the  vendor  to  the  broker.16  And  the  agreement  is  not 
more  binding  because  it  recites  a  consideration  of  "one 

'  St-e  §§  230-233   infra. 

2  Mooney   v.    Elder,    56  N.   Y.   238,   242    (1874). 

»  King   v.    Knowles,    122   App.    Div.   414    (N.   Y.    1907). 

«  Scott   v.    Neuberger.    58   Misc.    22    (N.    Y.    1908). 

B  Hinds  v.   Henry,   36   N.  J.   L.   332    (1873). 

•Moskowitz  v.   Hornberger,   15  Misc.  645    (N.   Y.   1896). 


242  COMMISSIONS   AND    THEIE   RECOVERY. 

dollar  and   other  good   and   valuable   considerations," 
when  in  fact  none  passed.17 

As  has  already  been  said,18  the  broker's  commissions 
are  by  the  weight  of  authority  earned  and  due  when  the 
minds  of  the  parties  are  through  him  brought  to  an  un- 
derstanding, and  an  agreement  to  wait  for  commissions 
until  the  title  is  closed  is  unsupported  by  any  considera- 
tion. The  fact  that  the  seller  refuses  to  make  the  con- 
tract unless  the  broker  agrees  to  wait  for  his  commission 
until  the  title  is  closed,  has  been  said  not  to  furnish  a 
sufficient  consideration.19 

But  in  another  case,20  where  the  proposed  vendor  re- 
fused to  execute  the  contract  unless  the  broker  consented 
to  the  incorporation  therein  of  the  following  provision: 
* '  The  vendor  agrees  that  Ole  E.  Larson  is  the  broker  who 
has  brought  about  this  sale,  and  agrees  to  pay  said 
broker  his  commission  therefor,  namely,  1  per  cent, 
when  balance  of  cash  amount  to  be  paid  is  made  and 
deed  actually  delivered,"  the  court  held  that  before 
the  broker  could  recover  he  must  show  either  that  the 
contract  was  carried  out  as  indicated,  or  that  non-per- 
formance was  the  fault  of  the  defendant.21 

Where  the  broker  for  securing  a  tenant  acquiesced  in 
the  remark  of  the  owner  that  no  commissions  were  to  be 
paid  unless  his  customer  took  a  lease  and  paid  over  the 
money,  he  is  not  bound  to  forego  his  commission  if  the 
customer  never  pays  the  money  or  executes  a  lease.  The 
broker's  acquiescence  is  not  a  binding  contract  because 
there  is  no  consideration  for  it.22  In  this  case,23  how- 
ever, the  court  intimated  that  there  was  no  pretense  that 
the  owner  stated  to  the  broker  that  he  would  not  accept 
the  customer,  or  execute  the  agreement,  unless  the  broker 

TRohkohl    v.    Sussman,    61    Misc.    249    (N.    Y.    1909). 
8  §§  228.  229  supra. 

•  Hough   v.    Baldwin.   50  Misc.   546    (N.   Y.    1906). 

*>  Larson  v.   Burroughs.    131  App.   Dlv.   877   (N.   Y.   1909). 

»  Citing  Seymour  v.  St.  Luke's  Hospital.  28  App.  Div.   119  (N.  Y.  1898). 

*  Benedict  v.  Plncus.   134  App.  Dlv.   555   (N.   Y.  1909). 


WHEN    COMMISSIONS   ARE   DUE.  243 

would  make  the  payment  of  his  commissions  conditional 
upon  payment  by  the  purchaser. 

§  231.    Valid  Agreements  Deferring  Payment  of  Com- 
missions. 

By  special  agreement,  however,  the  broker's  commis- 
sion may  be  made  to  depend  upon  the  actual  signing  of 
a  contract  or  passing  of  title,  or  other  contingency. 
Agreements  by  which  the  broker  is  to  wait  for  his  com- 
mission, in  order  to  be  binding  upon  him,  must  be  made 
before  the  broker  actually  has  earned  his  commission, 
or  else  must  be  founded  upon  some  consideration. 

Where  the  principal  states  that  no  commissions  are 
to  be  paid  unless  title  actually  passes,  or  imposes  any 
other  condition  and  does  this  at  the  time  he  engages  the 
broker,  the  agreement  is  binding,  since  it  is  a  part  of  the 
contract  of  employment,  and  if  the  broker  accepts  the 
employment  under  such  conditions,  he  must  abide 
thereby. 

While  the  statement  in  a  contract  of  sale  that  a  cer- 
tain person  is  the  broker  who  brought  about  the  sale,  may 
be  evidence  upon  which  to  hold  the  seller  or  the  buyer, 
as  the  case  may  be,  for  commissions,  yet  such  a  clause  is 
of  no  force  as  to  the  broker,  unless  he  is  a  party  to  the 
contract.  Hence,  where  such  a  clause  provides  that  com- 
missions are  only  to  be  paid  on  the  transfer  of  title,  it 
does  not  bind  the  broker  where  he  is  not  a  party  to  the 
agreement.24 

§  232.    Contingent  Commission  Agreements. 

If  the  broker  has  made  a  valid  agreement  that  his 
commission  shall  depend  upon  some  contingency,25  he 

•*  Winner  T.  Seale,   127  App.  Div.   180   (N.  Y.   1908). 
*  See  §  231  supra. 


244  COMMISSIONS   AND    THEIR    RECOVERY. 

must  show  that  the  contingency  has  happened,  or  that  it 
was  defeated  through  some  fault  of  the  obligor,  before 
he  can  recover.26 

Where  the  agreement  with  the  broker  provides  that 
"  commission  or  brokerage  will  be  paid  only  to  the  one 
who  actually  makes  and  finally  completes  the  sale  and 
has  the  contract  signed,"  it  must  be  shown  that  a  con- 
tract was  signed,  before  commission  can  be  recovered.27 

Where  the  agreement  provides  that  the  commission 
is  to  be  paid  "when  a  contract  for  the  sale  is  signed," 
the  securing  of  a  parol  offer,  which  is  accepted  by  the 
principal,  where  no  contract  of  sale  is  signed,  and  the 
person  making  the  offer  fails  to  complete  the  purchase, 
does  not  entitle  the  broker  to  commission.28 

Where  commissions  were  not  to  be  paid  until  and  un- 
less title  passed,  and  the  purchaser  failed  to  complete  his 
purchase,  no  right  to  commissions  accrued.29 

And  where  it  was  agreed  between  the  vendor  and  the 
broker  that  the  commission  should  not  be  due  and  pay- 
able until  title  passed,  and  title  did  not  pass  on  account 
of  defects  therein,  the  broker  is  not  entitled  to  commis- 
sion.30 

That  the  broker  was  to  receive  his  compensation  out 
of  the  proceeds  of  sale  does  not  make  his  right  to  com- 
pensation necessarily  dependent  upon  the  completion  of 
the  sale.  If  the  broker  performs  his  part  of  the  contract 
and  the  trade  is  defeated  by  the  inability  of  the  principal 
to  make  a  good  title,  then  the  broker  is  entitled  to  com- 
pensation for  his  services,  though  it  cannot  be  paid,  as 
agreed,  out  of  the  purchase  money.31 

Where  the  broker  is  to  receive  as  commission  all  he 

» Hinds   v.    Henry,    36   N.   J.    L.   333    (1873). 

27  Reichard  v.  Wallach,  91  N.  Y.  Suppl.  347   (1904).     See  also  Burch  v.   Hester,  109 
S.   W.  399   (Tex.    1908). 

28  Schlansky   v.    Hillman.    Ill    N.    Y.    Suppl.    696    (1908).      See   also    McDermott   v. 
Mahoney.    115  N.   W.   32    (Iowa   1908). 

29  Fittichauer  v.   Van   Wyok.   92   N.   Y.   Suppl.   241    (1905). 
"Couper  v.  O'Neil.   53  Misc.  319   (N.   Y.   1907).     But  see  §   233  infra. 

sl  Cheatham  v.  Yarhrouch.  90  Tenn.  77  (1891).  See  also  Berg  v.  San  Antonio  Co., 
17  Tex.  Civ.  App.  291  (1897). 


WHEN    COMMISSIONS   ABE   DUE.  245 

can  get  above  a  fixed  price,  he  is  entitled  to  no  compen- 
sation until  the  principal  receives  the  price  fixed  upon, 
unless  his  failure  to  receive  it  is  his  own  fault.  Hence 
the  agent  has  no  right  to  retain  advance  money  forfeited 
by  a  proposed  purchaser,  such  money  belonging  to  the 
principal.32  And  at  least  where  the  rule  prevails  that 
the  broker  must  bring  about  a  consummated  sale  to  earn 
his  commission,33  the  broker  cannot  retain  from  the  ven- 
dor the  forfeit  money  paid  by  a  purchaser  who  fails  to 
complete.34 

§  233.    Construction  of  Agreements  to  Wait  Until  Title 
Is  Closed. 

Even  where  commissions  are  to  be  paid  "at  the  clos- 
ing of  title, ' '  it  has  been  held  to  mean,  not  when  the  title 
is  actually  closed,  but  the  day  when  the  title  was  agreed 
to  be  closed.35 

Where  a  so-called  "binder"  for  the  sale  of  property 
provided  for  a  time  when  the  formal  contract  was  to  be 
executed,  and  also  contained  the  following  clause,  *  *  com- 
missions to  be  paid  to  *  *  on  closing  of  title,"  the 
court  held  that  the  provision  merely  fixed  the  time  when 
the  brokerage  should  be  payable  if  the  contract  was  per- 
formed, and  that  the  actual  closing  of  the  title  was  not  a 
condition  precedent  to  recovery  of  the  brokerage.36  The 
court  further  said:  "The  case  of  Fittichauer  v.  Van 
Wyck,  92  N.  Y.  Suppl.  241  (1905),  does  not  apply,  be- 
cause there  the  broker's  commissions  were  not  to  be  paid 
until  and  unless  title  passed.  Haase  v.  Schneider,  112 
App.  Div.  (N.  Y.)  336  (1906),  Peace  v.  Ross,  123  App. 
Div.  (N.  Y.)  611  (1908)  and  Shapiro  v.  Nadler,  51  Misc. 

M  Burnett  v.   Potts,  236  111.  499   (1908).     See  also  §  215  supra. 

33  See  §§    117-119   supra. 

M  CbiimlVrs    v.    Herring,    88   8.    W.   371    (Tex.    1005). 

M  Morgan  v.  Calvert,  120  App.  Div.  327  (N.  Y.  1908).  And  see  Plukerton  v. 
Hudson.  IK!  S.  W.  35  (Ark.  1908). 

*  Meltzer  v.  Straus,  61  Misc.  253  (N.  Y.  1909),  (citing  Morgan  v.  Calvert,  126 
App.  Div.  327  (N.  Y.  1908)  ). 


246  COMMISSIONS   AND   THEIR   RECOVERY. 

(N.  Y.)  13  (1906)  are  inapplicable,"  to  such  a  case,  "for 
the  reason  that,  in  those  cases,  the  parties  had  not  agreed 
upon  the  terms  of  the  contract,  while,  in  the  present  case, 
there  was  sufficient  evidence  to  warrant  the  jury  in  find- 
ing that  the  parties  fully  reached  an  agreement  as  to 
terms." 

Where  the  agreement  is  that  the  broker  shall  have  as 
commission  all  he  secures  above  a  fixed  price,  part  to  be 
paid  on  execution  of  contract  and  balance  "at  the  closing 
of  the  title,"  the  court  thought  that  "the  fair  reading  of 
the  contract  does  not  make  the  actual  closing  of  the  title 
a  condition  precedent  to  the  right  of  the  plaintiff  (the 
broker)  to  his  commission.  *  *  The  mere  fact  that  by 
reason  of  the  defendant's  defective  title  he  is  unable  to 
complete  his  contract  at  that  time  does  not  operate  to 
postpone  the  plaintiff's  right  to  payment."37 

In  another  case,38  it  was  held  that  where  the  broker 
agreed  that  no  commission  should  be  paid  until  title 
passed,  assuming  such  an  agreement  to  be  good,39  one 
party  cannot  arbitrarily  refuse  to  complete  the  sale  and 
be  relieved  of  liability  for  commission.  The  fair  intend- 
ment  of  such  an  agreement  is  that  the  broker's  commis- 
sion fails  only  in  case  title  is  not  passed  on  account  of 
some  circumstance  beyond  the  party's  control.  And 
where  the  commission  was  to  be  paid  out  of  the  final  pay- 
ments made  by  the  purchaser,  the  fact  that  the  final  pay- 
ments were  not  made,  because  the  purchaser  objected  to 
the  validity  of  the  title,  and  the  vendor  thereupon  re- 
turned the  payments  on  account,  does  not  deprive  the 
broker  of  his  right  to  recover.40 

Where  the  seller  deposits  a  sum  with  the  purchaser's 
attorney  to  be  delivered  to  the  broker  upon  the  seller's 
order  when  title  passes,  and  the  purchaser  does  not  com- 

«  Morgan   v.   Calyert,   126  App.   Div.  327    (N.   Y.    1908). 

«>Greenwald  v.   Rosen.  61   Misc.  260  (N.  Y.   1909). 
*»See  §§   230  supra,  234  Infra. 

«°  Bankers  Loan  Co.   Y.   Spindle,   108  Va.  426    (1908). 


WHEN    COMMISSIONS   ARE   DUE.  247 

plete  his  purchase,  the  seller  has  a  right  to  the  return  of 
the  money  irrespective  of  whether  the  broker  earned  his 
commission  as  the  deposit  was  subject  to  the  seller's 
order.  In  such  case  if  the  broker  has  earned  his  com- 
mission and  the  seller  refuses  to  give  the  order,  the 
matter  is  one  between  the  broker  and  the  seller.41 

§  234.    Deferred  Commissions  and  Vendor's  Warranty 
as  to  Title. 

In  a  Texas  case42  it  is  said:  "In  the  case  of  Gauthier 
v.  West,  47  N.  W.  Rep.  656,  it  is  stated  that  if  the  broker 
agrees  to  wait  for  his  commission  until  the  sale  is  fully 
completed,  there  is  an  implied  contract  that  the  defend- 
ant had  the  ability  and  would  confer  upon  the  purchaser 
a  perfect  title  to  the  property.  We  think  this  is  sound. 
And  we  are  unable  to  see  any  difference  between  cases 
where  the  owner  agrees  to  pay  the  agent  generally,  and 
where  there  is  a  stipulation  that  he  is  to  receive  his  pay 
when  the  sale  is  completed,  or  out  of  the  proceeds  when 
they  are  received.  In  the  latter  case  it  is  true,  the  agent 
would  have  to  await  the  completion  of  the  sale,  or  the  re- 
ceipt of  the  proceeds  after  the  sale.  So  far  his  compen- 
sation would  be  conditional.  In  cases  where  he  is  to  be 
paid  upon  the  completion  of  the  sale,  the  authorities  are 
that  the  broker  is,  nevertheless,  entitled  to  compensation, 
if  the  sale  was  not  completed,  because  of  the  owner's  in- 
ability to  give  a  good  title.  This  being  the  case,  how  can 
it  be  said  that  a  stipulation  that  he  was  to  await  the  pay- 
ment of  the  purchase  money,  or  be  paid  out  of  the  pur- 
chase money  when  received,  relieves  the  owner  from  the 
implied  warranty  that  he  has  a  good  title,  when  this  sale 
is  defeated  and  thereby  the  fund  out  of  which  the  agent 
was  to  be  paid  is  defeated,  for  such  reasons?  If  the  agent 

«  Bogart  T.  Reich,   128  App.  Div.  854   (N.  Y.  1908). 

«*  Berg  v.   Street  Railway  Co.,   17  Tex.  Civ.  App.   301,  302   (1897). 


248  COMMISSIONS    AND    THEIR   RECOVERY. 

can  recover  in  the  one  case  he  should  in  the  other.  As  a 
matter  of  course,  an  agreement  might  be  made  whereby 
the  broker  will  not  be  entitled  to  compensation  if  the  sale 
is  defeated  by  reason  of  the  title,  or  for  any  other  reason. 
There  is  nothing  in  the  contract  that  can  be  so  construed. 
It  is  plain  and  unambiguous.  It  was  agreed  that  he 
should  have  for  his  services  in  selling  appellant's  bonds, 
the  excess  over  a  fixed  sum  net,  to  be  paid  in  cash  as  the 
same  should  be  received  from  the  purchasers.  In  other 
words,  if  he  sold  the  bonds  for  a  surplus  over  the  fixed 
sum,  he  was  to  be  paid  this  surplus,  but  as  to  deferred 
payments,  having  to  await  their  payment,  to  this  extent 
only  his  pay  was  conditional.  There  was  no  condition 
that  if  the  sale  failed  for  any  reason,  he  was  to  receive  no 
commissions.  If  such  had  been  his  agreement,  it  may 
be  that  it  would  have  done  away  with  all  implied  war- 
ranty, as  was  held  in  Flower  v.  Davidson,  46  N.  W.  Rep. 
308.  It  may  be  proper  to  state  in  this  connection  that  in 
a  later  case  in  Minnesota,  Cromer  v.  Miller,  57  N.  W.  Eep. 
318,  the  doctrine  announced  in  Flower  v.  Davidson  was, 
it  seems,  applied  to  a  case  where  the  agent's  commission 
depended  upon  the  payment  of  the  purchase  money,  and 
the  Court  held  in  that  case,  citing  Flower  v.  Davidson, 
in  effect,  that  such  a  stipulation  did  away  with  the  im- 
plied warranty  concerning  the  title.  There  is  no  refer- 
ence to  Gauthier  v.  West,  which  seemed  to  hold  the  con- 
trary, a  case  decided  by  the  same  court.  We  are  of  opin- 
ion that  it  requires  more  than  the  agreement  shows  in 
the  present  case  to  be  construed  to  exclude  such  war- 
ranty." 

§  235.    Commissions  on  Instalment  Sales. 

Lots  in  the  suburbs  are  frequently  sold  on  the  instal- 
ment plan.  Urban  property  is  sometimes  also  so  sold. 
Where  land  companies  are  engaged  in  selling  suburban 


WHEN    COMMISSIONS   ARE   DUE.  249 

property  on  the  instalment  plan,  they  usually  have  an 
agreement,  or  at  least  an  understanding  with  their  sell- 
ing agents  as  to  how  the  commissions  shall  be  paid.43 

In  the  absence  of  any  agreement,  the  broker  need  not 
wait  for  his  commissions  until  collection  of  deferred  pur- 
chase money  payments.44  He  is  not  a  guarantor  of  de- 
ferred payments  or  covenants,  and  is  entitled  to  his  com- 
mission when  he  has  brought  about  a  sale  on  his  princi- 
pal's terms  or  upon  terms  satisfactory  to  the  principal. 
The  broker  does  not  therefore  have  to  wait  until  all  de- 
ferred payments  are  paid  and  all  covenants  on  the  part 
of  the  purchaser  are  complied  with.45 

But  where  the  broker  brings  a  purchaser  who  agrees 
to  pay  for  the  land  in  instalments,  and  the  vendor  agrees 
with  the  broker  that  the  latter  is  to  receive  his  commis- 
sions as  each  instalment  of  the  purchase  price  is  paid, 
the  broker  is  entitled  to  commissions  only  on  the  amounts 
of  the  purchase  price  actually  paid.46 

On  the  other  hand,  where  commissions  were  to  be  paid 
out  of  the  purchase  money  as  it  was  paid  to  the  vendor  in 
instalments  and  some  of  the  payments  were  made,  but 
before  all  were  made  the  purchaser  became  insolvent  and 
the  vendor  foreclosed  and  bought  in  the  land  at  a  price 
equal  to  the  amount  still  due  him,  it  was  held  that  the 
broker  was  entitled  to  recover  the  balance  of  his  commis- 
sion.47 The  same  would  be  true  had  someone  else  bid 
in  the  property  at  the  foreclosure  sale,  and  the  original 
vendor  thus  received  the  balance  of  the  purchase  price. 
So  long  as  the  original  vendor  received  the  balance  of 
the  purchase  price,  in  any  of  the  ways  contemplated  by 
the  contract  of  sale,  the  broker  could  recover  the  balance 
of  commissions  remaining  unpaid.48 

*»  Sec  Form  39  infra.  Part  VII,  for  a  comprehensive  agreement  of  this  nature. 
«*  Hancock  v.   Dodge,   85  Miss.  228   (1904). 
"Morgan  v.   Keller,   194  Mo.   680   (1905). 

*•  Murray  v.  Rickard,  103  Va.  132  (1904).  See  also  Moore  v.  Irvln,  20  L.  R.  A. 
(N.  S.)  1172  (Ark.  1909). 

"Crane  v.    Eddy,    191    111.   645    (1901). 
«/& 


PART    III. -PRINCIPAL    AND    AGENT. 


CHAPTER   XXIV. 
PRINCIPAL'S  RELATIONS  TO   AGENT. 

§  236.    General  Statement. 

An  owner  may  employ  several  brokers  for  the  sale  of 
the  same  property  and  is  liable  for  commissions  only  to 
the  broker  who  effects  the  sale.  (§  237.)  Although  an 
owner  employs  several  brokers,  he  may  negotiate  and  sell 
the  property  himself  without  liability  for  commissions. 
(§  238.) 

If  the  owner  gives  an  exclusive  agency,  he  subjects 
himself  to  liability  for  breach  of  contract  if  he  engages 
or  avails  himself  of  the  aid  of  another  broker  for  the 
same  purpose,  but  the  owner  himself  may  negotiate  per- 
sonally unless  he  has  also  precluded  himself  from  so  do- 
ing. (§  239.) 

If  while  the  broker  is  negotiating,  the  owner  inter- 
venes and  concludes  the  sale,  the  broker  is  still  entitled 
to  his  commissions.  (§  240.)  But  if  the  broker's  ef- 
forts fail  or  his  authority  is  in  good  faith  terminated,  the 
owner  is  not  precluded  from  negotiating  thereafter  with 
purchasers  who  were  introduced  by  the  broker.  (§§  241, 
242.) 

§  237.    Principal  May  Employ  Several  Brokers. 

"An  owner  may  employ  several  brokers  for  the  sale 
of  the  same  property,  and  is  of  course  only  liable  for  com- 

250 


PBINCIPAL'S  RELATIONS  TO  AGENT.  251 

missions  to  the  one  who  effects  the  sale."1  "A  person 
may  place  his  property  with  as  many  brokers  to  sell  as 
he  sees  fit,  but  it  is  only  the  one  who  produces  a  buyer, 
ready  and  able  to  purchase  on  the  employer's  terms,  that 
becomes  entitled  to  commissions."2 

§  238.    Negotiations  by  Principal. 

The  employment  of  one  broker  does  not  disable  the 
owner  from  employing  another,  or  from  negotiating  a 
sale  in  person,  since  the  right  of  the  principal  to  do  in 
person  or  by  another  that  which  he  has  empowered  his 
agent  to  do,  is  an  implied  condition  of  every  agency.3 
The  owner  does  not  agree  that  he  will  not  during  the  time 
sell  the  property  himself  or  through  the  agency  of  another 
broker.4  Where  the  agency  is  not  exclusive5  the  mere 
fact  that  property  is  left  in  a  broker's  hands  to  sell  does 
not  preclude  the  owner  from  selling  it  aside  from  the 
broker.6  The  owner  may  always  in  good  faith  sell  inde- 
pendent of  the  broker  unless  he  has  agreed  not  to  do  so.7 
And  if  he  sells  the  property  himself,  he  is  not  liable  to 
any  one  for  commissions.8 

§  239.    Exclusive  Agency. 

If  the  owner  employs  a  broker  with  the  understand- 
ing that  the  latter 's  agency  shall  be  exclusive,  the  owner 
subjects  himself  to  liability  for  breach  of  contract  if, 
notwithstanding,  he  engages  or  avails  himself  of  the  aid 

1  Sussdorff  v.   Schmidt,   55  N.   Y.   321    (1873)  ;   Hoadley  v.    Sav.   Bk.,   71  Conn.   599 
(1899)  ;  Cook  v.  Forst,   116  Ala.  396  (1896).     See  also  Chap.  IX  supra. 

2  Freedmnn   v.    Havenmeyer.  37  App.    Dlv.   518    (N.    Y.    1899). 

3  Levy   v.    Rothe,    17    Misc.   403    (N.    Y.    1896),    (citing  Chllton    v.    Butler.    1    E.    D. 
Smith    (N.    Y.)    150;    Goldsmith    v.   Cook,    39    N.    Y.    St.    Rep.    57;   Dole   v.    Sherwood.    5 
Law.    Rep.   Ann.   720).     See  also  Rothenburger  Y.   Schonlger,   99  S.   W.    1150   (Ky.    1907). 

4  Brlggs    v.    Boyil,    56   N.    Y.    294    (1874);    Hoadley    v.    Savings   Bk.,    71    Conn.    599 
(1899);   Kimball  v.   Hayes,   199  Mass.  520   (1908). 

B  See  §   239  infra. 

«  Cole  v.  Kosph.  110  App.  Dlv.  718  (N.  Y.  1907);  Armstrong  v.  Wann,  29  Minn. 
126  (1882);  Dolan  v.  Scanlan.  57  Cal.  265  (1881). 

7  Burch  v.  Hester,  109  S.  W.  399  (Tex.  1908)  ;  Cook  v.  Forst,  116  Ala.  396 
(1896);  Humphries  v.  Smith,  5  Oa.  App.  343  (1908). 

s  Sussdorff  v.  Schmidt,  55  N.  Y.  321  (1873)  ;  SIbbald  v.  Bethlehem  Iron  Co.,  83 
N.  Y.  384  (1880)  ;  Hoadley  v.  Savings  Bk.,  71  Conn.  599  (1899). 


252  PRINCIPAL    AND    AGENT. 

of  another  broker  for  the  same  purpose.9  But  the  owner 
himself  may  negotiate  personally,  unless  his  agreement 
with  his  broker  precludes  him  also  from  so  doing.10  But 
while  a  broker  may  have  the  exclusive  agency  to  sell, 
there  is  nothing  in  that  fact,  unless  the  agreement  so 
provide,  which  entitles  him  to  commissions,  unless  he  is 
the  procuring  cause  of  the  sale.11 

§  240.    Intervention  of  Principal. 

If  the  purchaser  is  found  by  the  broker's  efforts  and 
through  his  instrumentality,  he  is  entitled  to  compen- 
sation, although  the  owner  negotiates  the  sale  himself.12 

Also,  if  the  owner,  while  the  broker  is  treating  for  the 
sale  of  the  property,  interferes  and  makes  a  bargain 
himself  with  the  same  person  for  the  sale,  upon  the 
terms  prescribed  for  the  broker,  or  upon  any  other  terms, 
he  is  liable  for  the  commissions.13  Thus  where  a  bro- 
ker employed  to  sell  at  a  specified  price,  procures  a  pro- 
posed purchaser  and  opens  negotiations  with  him,  the 
fact  that  the  employer,  without  terminating  the  agency 
or  the  negotiations  so  commenced,  takes  the  matter  into 
his  own  hands  and  concludes  the  sale  at  a  lower  price 
does  not  deprive  the  broker  of  his  right  to  commissions.14 

§  241.    Intervention  of  Principal  after  Broker's  Failure 
or  Termination  of  Authority. 

Where  a  broker  opens  negotiations,  but  fails  to  bring 

•Levy  v.  Rothc,  17  Misc.  403  (N.  Y.  1896).  For  forms  for  exclusive  agency  see 
Forms  36,  37  infra,  Ch.  XL. 

i°  Levy  v.   Eothe,  supra;  Dole  v.  Sherwood,   5  L.   R.   A.   720   (Minn.   1889). 

11  Davis  v.   Van  Tassel,    107   N.   Y.    Suppl.   910    (1907);    Wigsins  v.   Wilson,    45   So. 
1014    (Fla.    1908),    (citing  Waterman  v.    Boltinghouse,    82   Cal.   659;    23   Pac.    195;   Cath- 
cart  v.   Bacon,  47  Minn.   34  ;  49   N.   W.   331 ;   Blodgett  v.   Sioux  C.   &  St.   P.   Ry.   Co.,   63 
Iowa   60C;    19   N.    W.    799;    McGavock  v.    Woodlief,    20    How.    (U.    S.)    221;    15   L.    Ed. 
SS4 ;  Wylie  v.   Marine  Nat.  Bk.,  61   N.  Y.  415 ;  Babcock  v.   Merritt,   1  Colo.  App.  84  ;  27 
Pac.    882 ;    Stephens   v.    Scott,    43    Kans.    285 ;    23    Pac.    555 ;    Henderson    v.    Vincent,    84 
Ala.  99;  4  So.   180;  Illingsworth  v.   Slosson,   19  111.   App.   612;  Cullen   v.   Bell,   43  Minn. 
226;  45  N.   W.  428).     See  also  §§  99,   100  supra. 

12  Sussdorff  v.  Schmidt,   55  N.  Y.   322    (187.°,).     See  also  §   100  sunra. 

is  Briggs  v.  Boyd,  56  N.  Y.  294  (1874);  Hovey  v.  Aaron,  133  Mo.  App.  582 
(1908);  Hoadley  v.  Savings  Bk.,  71  Conn.  599  (1899).  See  also  §§  129,  130  supra. 

"  Hobbs  v.  Edgar,  23  Misc.  618  (N.  Y.  1898);  McOovern  v.  Bennett,  14C  Mich. 
558  (1906) ;  Glade  v.  Eastern  111.  Min.  Co.,  107  S.  W.  1005  (Mo.  1908). 


PRINCIPAL'S  RELATIONS  TO  AGENT.  253 

the  customer  to  the  specified  terms  and  abandons  the  ne- 
gotiations, the  employer  may  subsequently  sell  to  the 
same  person  at  the  price  fixed,  without  liability  for  com- 
mission.15 Also,  where  there  was  no  employment,  and 
the  owner  sold  the  property  to  a  person  who  had  made 
an  offer  through  the  broker  almost  two  years  before,  it 
was  held  that  there  was  no  ratification  of  an  employment 
of  the  broker  alleged  to  have  been  made  by  the  owner's 
agent,  especially  where  the  owner  himself  knew  nothing 
about  any  claim  of  the  broker.16 

In  Miller  v.  Vining,  112  App.  Div.  304  (N.  Y.  1906), 
where  the  negotiations  with  the  prospective  purchaser 
were  broken  off,  and  the  broker  undertook  to  sell  him 
other  properties  of  different  people,  and  a  month  after- 
ward, without  the  intervention  of  the  broker,  the  owner 
and  the  purchaser  came  together  on  different  terms,  re- 
sulting in  a  sale,  the  court,  in  holding  that  the  broker 
was  not  entitled  to  commissions,  said:  "It  is  elemen- 
tary that  to  be  entitled  to  commissions  the  broker  must 
be  the  procuring  cause  of  the  sale,  and  if  his  efforts  fail 
his  employer  is  not  precluded  from  thereafter  negotiat- 
ing with  the  purchaser  introduced  by  him,  even  on  the 
same  terms,  without  being  obliged  to  pay  commissions. ' ' 

§  242.    Rule  when  Broker's  Efforts  Fail. 

In  Schano  v.  Storch,  56  Misc.  484  (N.  Y.  1907),  the 
Appellate  Term  stated  the  rule  thus:  "  Where  a  bro- 
ker's efforts  fail,  his  employer  is  not  precluded  from 
thereafter  negotiating  with  the  purchaser  found  by  the 
broker,  even  on  the  same  terms,  and  the  mere  fact  that 
the  broker's  efforts  may  have  led  to  subsequent  negotia- 
tions, which,  under  more  favorable  circumstances,  re- 

15  Smith  v.  Kimball,  193  Mass.  585  (1907)  ;  West  End  Dry  Q.  S.  v.  Maun,  133 
111.  App.  550  (1907);  Falrchlld  v.  Cunningham,  84  Minn.  524  (1901);  Marlins  Y.  Ken- 
neally.  43  N.  Y.  Suppl.  1056  (1897). 

w>Cohn  v.  Lee,   132  App.  Dlr.  697    (N.  Y.   1909). 


254  PRINCIPAL   AND   AGENT. 

suited  in  a  sale,  does  not  alone  entitle  the  broker  to  a 
commission."17 

But  it  is  evident  that  this  only  applies  where  the 
broker's  efforts  have  ended  in  failure.  After  the  bro- 
ker's failure  to  bring  about  a  sale,  or  after  his  authority 
is  fairly  and  in  good  faith  terminated,  others  may  to 
some  extent  avail  themselves  of  the  fruits  of  his  labors. 
In  such  case  the  principal  may  sell  to  the  first  party  who 
offers  the  price  asked  and  it  matters  not  the  sale  is  to 
the  very  party  with  whom  the  broker  had  been  negotiat- 
ing.18 But  "  if  the  efforts  of  the  broker  are  rendered  a 
failure  by  the  fault  of  the  employer;  if  capriciously  he 
changes  his  mind  after  the  purchaser,  ready  and  willing, 
and  consenting  to  the  prescribed  terms,  is  produced;  or 
if  the  latter  declines  to  complete  the  contract  because  of 
some  defect  of  title  in  the  ownership  of  the  seller,  some 
unremoved  incumbrance,  some  defect  which  is  the  fault 
of  the  latter,  then  the  broker  does  not  lose  his  commis- 
sions/'19 

"  See  also  West  End  Dry  G.  S.  v.  Mann,   133  111.  App.  550   (1907). 

18  Hoadley  v.  Savings  Bk.,  71  Conn.  599  (1899);  Emery  v.  Atlanta  Eich.,  88  Ga. 
329  (1891),  (citing  Livezy  v.  Miller,  61  Md.  336;  Lipe  v.  Ludewick,  14  111.  App.  372; 
and  others). 

"Slbbald   v.    Bethlehem   Iron   Co.,    83   N.    Y.    383,    384    (1880). 


CHAPTER  XXV. 
AGENT'S   RELATIONS    TO    PRINCIPAL. 

§  243.    General  Statement. 

An  agent  is  bound  to  exercise  good  faith,  reasonable 
diligence  and  ordinary  skill  (§§  244-246),  and  he  must 
not  exceed  his  authority.  (§  247.) 

It  is  the  agent's  duty  to  disclose  to  his  principal  any 
information  he  may  have  relevant  to  the  agency,  and  the 
presumption  is  that  he  does  make  such  disclosure,  except 
where  he  has  some  private  purpose,  the  accomplishment 
of  which  would  be  imperiled  thereby.  (§  248.) 

The  agent  may,  as  a  necessary  incident  of  powers  ex- 
pressly conferred,  make  and  endorse  negotiable  paper  in 
the  transaction  of  his  principal's  business.  (§  249.) 

In  some  jurisdictions  an  action  against  an  agent  for 
conversion  of  his  principal's  money  will  not  lie,  and  the 
only  remedy  is  an  action  on  contract,  but  in  New  York 
an  action  in  tort  will  lie  to  recover  money  which  the 
agent  refuses  to  deliver  to  his  principal.  (§  250.) 

§  244.    Agent's  Responsibility  to  Principal. 

"An  agent  is  bound  not  only  to  good  faith  but  to 
reasonable  diligence,  and  to  such  skill  as  is  ordinarily 
possessed  by  persons  of  common  capacity  engaged  in 
the  same  business.  Whether  or  not  he  has  exercised 
such  skill  and  diligence  is  usually  a  question  of  fact ;  but 
its  omission  is  equally  a  breach  of  his  obligation  and  in- 
jurious to  his  principal,  whether  it  be  the  result  of  in- 
attention or  incapacity,  or  of  an  intent  to  defraud. ' ' l 

i  Heinemann  v.  Heard,  50  N.  Y.  35  (1872)  ;  Clark  &  Skyles  on  Agency,  §§  392 
ct  teq. 

266 


256  PRINCIPAL   AND   AGENT. 

§  245.    Agent  Must  Act  in  Interest  of  Principal. 

"  It  is  a  well-settled  principle  of  morals  as  well  as  of 
law,  that  the  agent  must  faithfully  serve  his  principal. 
However  unquestioned  may  be  the  honesty  of  the  agent, 
or  his  impartiality  between  his  own  interests  and  those 
of  his  principal,  he  is  bound  to  the  exercise  of  all  his 
skill,  ability  and  industry  in  favor  of  his  principal.  As  an 
agent  to  sell,  it  is  his  duty  to  get  the  highest  fair  price ; 
and  this  duty  is  wholly  incompatible  with  his  wish  to 
buy.  In  every  trust  this  principle  prevails.  No  agent 
or  trustee  can  deal  with  the  subject  matter  of  his  trust, 
except  for  the  benefit  of  his  principal.  And  the 

rule  in  equity  is,  that  any  act  by  an  agent  in  respect  to 
the  subject  matter  of  the  agency,  injurious  to  the  prin- 
cipal, may  be  avoided  by  the  principal,  and  where  an 
agent  to  sell  becomes  the  purchaser,  the  court  will  pre- 
sume that  the  transaction  was  injurious,  and  will  not 
permit  the  agent  to  contradict  the  presumption.2  The 
policy  of  this  rule  is  obvious.  The  confidence  reposed 
in  the  agent  must  not  be  abused.  His  position  of  trust 
must  not  be  employed  to  his  own  advantage,  or  to  the 
injury  of  his  principal.  In  short,  while  in  the  employ- 
ment of  his  principal,  his  principal's  interest  must  be 
his  interest,  and  he  may  have  no  interest  which,  conflict- 
ing with  those  of  his  principal,  can  work  injury  to  the 
latter."3 

§  246.    Agent's  Duty  of  Faithful  Service. 

"  It  is  the  unquestionable  duty  of  an  agent  to  act  in 
matters  touching  the  agency  with  a  sole  regard  to  the 
interests  of  his  principal.  The  agent  in  accepting  the 
employment  undertakes  to  manage  the  interests  confided 
to  him,  and  discharge  the  trust  reposed  in  him  to  the 

•Citing  Coles  v.  Thecothlck,  9  Ves.   234,  247. 

»  McDonald  v.  Lord,  26  How.  Pr.  40T  (N.  Y.  1864)  ;  Clark  &  Skyles  on  Agency, 
§5  404  et  aeq.  See  also  §§  59-71  supra. 


AGENT'S  RELATIONS  TO  PRINCIPAL.  257 

best  of  his  ability  for  the  benefit  of  his  principal.  The 
compensation  to  which  he  is  entitled  is  the  consideration 
for  the  engagement  into  which  he  enters.  The  reward 
is  the  inducement  to  the  service,  and  faithful  service  is 
generally  the  condition  upon  which  the  reward  becomes 
due.  An  agent  for  sale  cannot  sacrifice  the  property 
of  the  principal  for  the  sake  of  his  commissions,  but  the 
desire  of  earning  them  is  generally  a  motive  to  diligence, 
and  an  incentive  to  exertion.  When  the  duty  and  in- 
terest of  the  agent  coincide,  and  he  does  the  act  which 
his  duty  prompts,  but  the  impelling  motive  is  the  interest 
which  he  is  to  derive  from  it,  and  not  the  duty,  the  act 
must  stand  justified  although  the  motive  may  be  criti- 
cised. There  is  in  the  case  supposed,  no  conflict  between 
his  duty  and  his  interest.  The  act  corresponds  with  the 
duty,  but  the  motive  which  prompted  it  is  a  low  and  in- 
ferior one.  This  cannot,  however,  affect  the  validity  of 
the  act  as  between  the  principal  and  agent. ' ' 4 

§  247.    Agent  Must  Not  Exceed  Authority. 

"An  agent  must  also  obey  instructions  and  observe 
the  terms  of  the  agency;  otherwise  he  does  not  perform, 
in  the  eye  of  the  law,  his  full  duty  towards  his  principal 
and  is  not  entitled  to  receive  the  compensation  for  his 
services  promised  to  him  in  the  contract  of  agency. ' ' 5 

"A  departure  by  an  agent  from  his  instructions  does 
not  ipso  facto  constitute  fraud.  It  is  competent  evidence 
on  the  issue  of  fraud  in  an  action  by  the  principal  against 
him,  and,  with  other  circumstances,  may  satisfactorily 
establish  it.  Agents  frequently  overstep  the  limits  of 
their  authority,  and  it  is  quite  conceivable  that  it  is  often 
done  in  the  supposed  interest  of  their  principal.  In 
such  cases  they  take  the  risk.  If  the  principal  ratifies 

«  Price  v.  Keyes,   62  N.  Y.   382,   383,  384    (1875). 

»  Raleigh  R.  E.  &  Trust  Co.  v.  Adams,   145  N.  C.   165   (1907). 


258  PRINCIPAL   AND    AGENT. 

the  act,  they  stand  justified.  If  he  disaffirms  it  and  suf- 
fers loss  from  it,  the  agent  is  responsible.  But  proof 
that  an  agent  has  transcended  the  limits  of  his  authority, 
would  not  alone  support  an  action  by  the  principal  for  a 
fraudulent  misuse  of  his  power. ' ' 6 

§  248.    Agent  Must  Disclose  Information. 

"An  agent  owes  a  duty  to  his  principal  to  disclose 
to  him  any  information  which  he  may  have  which  may 
be  relevant  to  that  agency.7  The  law  conclusively  pre- 
sumes that  the  agent  makes  such  disclosure,  unless  the 
agent  has  some  private  purpose  to  accomplish,  the  ac- 
complishment of  which  would  be  imperiled  thereby, ' ' 8 
as  where  the  broker  is  secretly  interested  in  the  deal  or 
is  engaged  in  furthering  a  scheme  to  defraud  his  prin- 
cipal.9 

"  The  concealment  by  an  agent  of  facts  which  are 
material  to  his  principal's  interests,  especially  after  in- 
quiry made,  amounts  in  law  to  fraud." 10  And  so,  where 
in  an  exchange,  one  of  the  parties  requests  the  broker  to 
ascertain  the  actual  rental  of  the  property  he  is  to  take, 
and  the  broker  procures  an  erroneous  statement  thereof, 
which  the  principal  relies  upon  and  contracts  to  ex- 
change, but  rescinds  after  learning  the  facts,  the  bro- 
ker is  not  entitled  to  commissions.11 

§  249.    Agent's  Power  to  Make, and  Endorse  Negotiable 
Paper. 

"It  is  not  always  necessary  that  explicit  authority 
must  be  given  an  agent  to  justify  his  indorsement  of  a 

•Price  v.   Keyes,  62  N.  T.  382,  383,  384   (1875). 

7  See  Raleigh  R.  E.  &  T.  Co.  v.  Adams,  145  N.  C.   165  (1907)  ;  Rodman  v.  Manning, 
99  Pac.   657    (Ore.    1909). 

*  Crooks  v.  People's  Nat.  Bank,  72  App.  Div.  335  (N.  Y.  1902)  ;  Clark  &  Skyles  on 
Agency.  §  416.  See  also  §§  264-266  infra. 

8  See   Henry   v.    Allen,    151    N.    Y.    1    (1896);    Benedict  v.   Arnoux,    154    N.    Y.   728 
(1898);  Constant  v.  Un.  of  Rochester,  111  N.  Y.  611   (1888). 

10  Low  T.   Woodbury,    107  App.   Dlv.   298    (N.   Y.    1905). 
"Marcus  v.  Bloomlngdale,  63  App.  Div.  227    (N.  Y,  1901). 


AGENT'S  RELATIONS  TO  PRINCIPAL.  259 

check  or  bill  drawn  to  his  principal's  order.  An  agent 
who  is  employed  to  procure  a  note  to  be  discounted  may 
indorse  it  in  the  name  of  his  employer,  or  he  may,  un- 
less expressly  restricted,  indorse  it  in  his  own  name  and 
claim  indemnity  of  his  principal.12  And  the  power  to 
make  and  indorse  negotiable  instruments  may  be  implied 
as  a  necessary  incident  of  powers  expressly  conferred, 
as  where  an  entire  business  or  an  entire  transaction  is 
intrusted  to  the  agent  and  it  becomes  necessary  to  make 
or  indorse  negotiable  paper  in  order  to  effectually  carry 
out  the  agency."13 

§  250.    Agent's  Liability  for  Conversion  of  Money. 

The  claim  is  often  made,  and  in  some  jurisdictions 
sustained,  that  conversion  will  only  lie  for  the  conver- 
sion of  certain  specific  personal  property,  to  which  cate- 
gory money  does  not  belong,  and  that,  therefore,  an 
action  for  its  conversion  will  not  lie;  and  that  the  only 
remedy  is  an  action  on  contract. 

In  New  York  it  is  settled  that  an  action  in  tort  will 
He  to  recover  money  received  by  an  agent,  broker  or 
other  person  in  a  fiduciary  capacity,  which  he  refuses 
to  deliver  to  his  principal.14 

"  Citing  Nelson  v.   Hudson   River  R.   R.   Co.,   48  N.   T.  498. 

"Forges  v.  U.  S.  Mortgage  &  Trust  Co.,  135  App.  Dlv.  487,  488  (N.  Y.  1909), 
(citing  Whltten  v.  Bank  of  Flncastle.  100  Va.  546 ;  Gould  v.  Bowen,  26  Iowa  77 ;  Gate 
City  Building  &  Loan  Assn.  v.  Nat.  Bank  of  Commerce,  126  Mo.  82). 

"Jones  v.  Smith.  65  Misc.  528  (N.  Y.  1910),  (citing  Brltton  v.  Ferrln,  171 
N.  Y.  235;  Jackson  v.  Moore,  94  App.  Dlv.  (N.  Y.)  504,  508). 


CHAPTER  XXVI. 
LIABILITY   OF   BROKER  AND   PRINCIPAL. 

§  251.    General  Statement. 

If  a  broker  commits  a  fraud  in  the  course  of  his  em- 
ployment he  is  liable  and  so  is  his  principal.  (§§  252- 
255.) 

All  persons  who  act  for  or  in  the  name  of  the  owner 
in  bringing  about  the  transaction  must  be  deemed  his 
agents  where  he  accepts  the  fruits  of  their  efforts,  and 
the  owner  may  not,  even  though  innocent,  receive  the 
benefits  and  at  the  same  time  disclaim  responsibility  for 
the  fraud  by  means  of  which  they  arose.  (§§  254-256.) 

§  252.    Misrepresentations  by  Brokers  and  Agents. 

In  case  of  fraud  on  the  part  of  agent  or  principal, 
there  is  always  more  or  less  difficulty  in  procuring  the 
proof  necessary  to  establish  the  conditions,  or  in  deter- 
mining from  the  facts  presented  whether  or  not  fraud 
was  practiced.  These  are,  however,  matters  of  evidence. 
What  is,  and  what  is  not  considered  fraud  in  real  estate 
transactions  is  discussed  later.1 

Where  the  vendor  himself  makes  representations  and 
the  elements  of  fraud  are  present,  no  serious  difficulties 
present  themselves  with  respect  to  the  substantive  law  of 
fraud.  Where,  however,  the  misrepresentations  are  not 
made  by  the  vendor  himself,  a  question  may  arise.  To 
what  extent  is  he  liable  for  fraud  committed  not  by  him- 
self personally  but  by  others  in  some  way  connected  with 

*  See  Chs.  XXIX-XXXIII  infra. 

260 


LIABILITY    OF   BBOKER   AND   PRINCIPAL.  261 

the  transaction?  Of  course,  to  incur  liability  a  defend- 
ant need  not  make  false  representations  personally.  If 
he  authorized  and  caused  them  to  be  made  it  is  enough.2 
"  If  the  agent  commits  a  fraud  in  the  course  of  his  em- 
ployment, he  is  liable,  and  so  is  his  principal.  If  he  com- 
mits a  fraud  outside  the  scope  of  his  authority,  he  would 
be  liable  but  not  his  principal." 3  In  Ripy  v.  Cronan,  115 
S.  W.  791  (Ky.  1909),  it  was  said  that  in  the  absence  of 
any  confidential  relation  between  the  broker  and  intend- 
ing purchaser,  or  fraud  to  prevent  inquiry  or  investiga- 
tion by  such  purchaser,  a  real  estate  broker  cannot  be 
held  liable  for  representing  to  an  intending  purchaser 
that  the  owner  would  not  accept  less  than  the  sum  named 
by  the  broker  for  the  premises,  though  the  owner  had  in 
fact  agreed  with  him  to  sell  at  a  lower  figure. 

§  253.    When  Vendor  is  Liable  for  Broker's  Represen- 
tations. 

There  are  cases  which  hold  that,  "As  a  general  pro- 
position, a  principal  is  not  responsible  for  the  deceit 
practiced  by  his  agent,  unless  there  is  something  in  the 
nature  of  the  engagement,  the  terms  of  the  employment, 
or  the  powers  conferred,  broad  enough  to  include  a  power 
on  the  part  of  the  agent  to  deal  with  the  property  in  such 
manner  that  the  principal,  in  good  morals  and  equity, 
ought  to  be  bound  by  what  the  agent  may  have  said. 
There  are  many  cases  which  hold  the  principal  respon- 
sible for  the  fraud  and  misrepresentation  and  acts  of 
the  agent  when  he  accepts  the  fruits  of  the  contract,  and 
refuses  to  surrender.  As  the  cases  put  it,  he  may  not 
be  permitted  to  reap  the  harvest  and  refuse  to  pay  for 
the  seed.  When  those  decisions  are  examined,  it  will  be 

2  Brackett   v.    Grlswold,    112   N.   Y.   4G7    (1889). 

3  Clark    on    Contracts,    745;    Rhoda    v.    Annls,    75    Me.    17    (1883);    Branckman    v. 
Lelghton,   60  Mo.   App.   41    (1894)  ;   Farris  v.   Glider,    115  S.   W.   045    (Tex.   1909).     See 
also  Cbs.   XXVII,   XXVIII  infra. 


262  PRINCIPAL   AND   AGENT. 

seen  there  was  an  attempt  on  the  part  of  the  vendee  to 
rescind  the  sale,  and,  the  vendor  refusing,  he  was  held 
liable  for  the  representations.  In  all  of  them  the  respon- 
sibility of  the  principal  is  put  upon  this  basis.  Where, 
however,  there  is  no  attempt  on  the  part  of  the  vendee 
to  rescind,  but  he  affirms  the  sale,  he  can  bring  his  action 
for  deceit  only  against  the  agent  who  has  been  guilty 
of  the  misrepresentations,  unless  he  is  able  to  trace  some 
connection  between  the  principal  and  the  agent,  and 
thereby  charge  the  former  with  responsibility  for  what 
the  agent  may  have  said  or  done.  An  innocent  principal, 
who  has  simply  authorized  an  agent  to  sell  property, 
cannot  be  charged  in  an  action  of  deceit  for  the  agent's 
wrongs  unless  in  some  manner  he  be  connected  with 
them.  This  distinction  is  recognized,  and  the  doctrine 
commends  itself  to  our  judgment. ' ' 4 

The  courts  are  not,  however,  unanimous  in  thus  re- 
stricting the  liability  of  the  principal  as  will  be  seen  by 
an  examination  of  the  succeeding  sections.  On  the  con- 
trary, it  has  been  said  that  the  current  of  authority  ap- 
pears to  be  in  favor  of  discarding  all  such  distinctions 
and  holding  the  principal  liable  at  law  and  in  equity  alike 
for  the  frauds  of  his  agent  or  servant  in  the  course  of 
employment,  provided,  of  course,  they  were  committed 
within  the  scope  of  authority  of  the  agent  and  in  the  in- 
terest of  the  principal.5 

§  254.    Vendor  Liable  if  He  Accepts  Proceeds. 

* '  All  persons  who  act  for  or  in  the  name  of  the  owner 
in  bringing  about  the  transaction  must  be  deemed  his 
agents  where  he  accepts  the  fruits  of  their  efforts,  and 
all  the  methods  employed  by  them  are  imputable  to  him; 
he  may  not  even,  though  innocent,  receive  and  recover 

*  Mayo  v.  Wahlgreen,  50  Pac.  43  (Colo.  1897),  (citing  Kennedy  v.  McKay,  43 
N.  J.  L.  393;  Decker  v.  Fredericks,  47  N.  J.  L.  469;  1  Atl.  470). 

6  Alger  v.  Anderson.  78  Fed.  Rep.  729  (1897).  See  also  Clark  &  Skyles  on  Agency, 
pp.  1112-1113;  1  Am.  &  Eng.  Ency.  of  Law  (2nd  Ed.),  1178-1179. 


LIABILITY   OF   BROKER   AND   PRINCIPAL.  263 

upon  a  security  given  on  the  sale  and  at  the  same  time 
disclaim  responsibility  for  the  fraud  by  means  of  which 
the  purchaser  was  induced  to  deliver  it. "  °  * '  It  is  an 
established  principle  of  law  that  where  a  person  acts  for 
another  who  accepts  the  fruits  of  his  efforts,  the  latter 
must  be  deemed  to  have  adopted  the  methods  employed, 
as  he  may  not,  even  though  innocent,  receive  the  benefits 
and  at  the  teame  time  disclaim  responsibility  for  the 
fraud  by  means  of  which  they  arose. " 7  "  Where  a  prin- 
cipal adopts  and  ratifies  the  acts  of  his  agent  by  receiv- 
ing the  fruits  of  it  or  otherwise,  he  assumes  responsibil- 
ity for  the  instrumentalities  which  the  agent  has  em- 
ployed in  his  behalf  to  effect  the  contract."8  Even 
where  the  agent's  false  representations  were  never  au- 
thorized or  suspected  by  the  principal,9  a  reception  and 
retention  of  the  proceeds  may  make  the  latter  respon- 
sible for  the  fraud.10 

§  255.    Principal  Bound  by  Agent's  Representations. 

In  Mayer  v.  Dean,  115  N.  Y.  560,  561  (1889),  it  is  said : 
11  There  is  no  doubt  of  the  general  rule  that  to  a  certain 
extent  a  principal  is  bound  by  the  representations  of  his 
agent  made  in  effecting  a  sale  of  property.  Such  an 
agent  must  be  presumed  to  possess  authority  to  make 
such  representations  in  regard  to  its  quality  and  condi- 
tion as  usually  accompany  such  transactions,  and  his 

«  Fairehlld  v.  McMahon.  139  N.  T.  290  (1893)  ;  Garner  v.  Mangam,  93  N.  Y.  642 
(1883);  Rhoda  v.  Annis,  75  Me.  24,  25  (1883);  Forster  v.  Wilhusen,  14  Misc.  520 
(N.  Y.  1895). 

^  Taylor  v.  Commercial  Bank,  174  N.  Y.  188  (1903).  To  the  same  effect  are  Carr 
v.  Nat.  Bank  &  Loan  Co.,  43  App.  Div.  10  (N.  Y.  1899)  ;  Seeber  v.  People's  Bldg.,  etc., 
Assn.,  36  App.  Div.  310  (N.  Y.  1899)  ;  People  v.  Campbell.  22  App.  Div.  170  (N.  Y. 
1897)  ;  Reynolds  v.  Witte,  13  S.  C.  16  (1879).  See  also  Reitman  v.  Florlllo,  72  Atl. 
74  (N.  .T.  1009),  and  3  Columbia  Law  Review.  30.". 

8  Riimsey  v.   Briggs.   139  N.  Y.  331    (1893)  ;  Lane  v.  Black,   21   W.   Va.   626   (1883). 

•Law  v'.   C.rant,   37  Wise.  557   (1875). 

1°  Coykendall  v.  Constable,  99  N.  Y.  314  (1885);  Alger  v.  Anderson.  78  Fed.  735 
(1897).  (citing  Franklin  v.  Ezell.  1  Sneed  497;  Barnard  v.  Iron  Co.,  85  Tenn.  139; 
2  S.  W.  21  ;  .Tewett  v.  Carter,  132  Mass.  335 ;  Cont.  Ins.  Co.  v.  Ins.  Co.  of  Penn.,  2 
C.  C.  A.  535;  51  Fed.  890;  2  Jag.  Torts,  267,  271;  Story  on  Agency.  §§  134.  452;  1 
Am.  &  F,ng.  Enc.  of  Law  (2nd  Ed.),  1158,  1159;  1  BIgelow  on  Fraud.  225-228;  2 
Kent  Comm.,  marg.  p.  621  and  notes;  Kennedy  v.  McKay.  43  N.  3.  L.  288;  Mason  v. 
Crosby,  10  Fed.  Cas.  1016;  Doggett  v.  Emerson,  7  Fed.  Cas.  804). 


264  PRINCIPAL,   AND   AGENT. 

principal  cannot  receive  the  fruits  of  a  bargain  without 
adopting  the  instrumentalities  employed  by  his  agent  in 
bringing  it  to  a  consummation.11  In  an  action  between 
vendor  and  vendee,  knowledge  possessed  by  either  the 
principal  or  the  agent  is,  respectively,  imputable  to  each 
other,  and  an  agent,  whose  principal  has  knowledge  of 
latent  defects  in  property  proposed  to  be  sold,  cannot 
honestly  represent  to  its  intending  purchaser  that  it  is 
free  from  such  defects.  It  is  well  settled  in  this  state 
that  a  principal  cannot  retain  the  benefits  of  a  contract 
obtained  through  the  misrepresentations  of  his  agent, 
even  though  the  principal  was  ignorant  of  the  represen- 
tation and  really  intended  no  fraud.  It  was  held  in  Ben- 
nett v.  Judson,  21  N.  Y.  238  (1860),  that  a  vendor  of  land 
is  responsible  for  material  misrepresentations,  in  re- 
spect to  its  location  and  quality,  made  by  his  agent  with- 
out express  authority,  and  in  the  absence  of  any  actual 
knowledge  by  either  the  agent  or  the  principal,  whether 
the  representations  were  true  or  false.  *  It  is 

consonant  with  reason  and  justice  that  a  principal  should 
not  be  allowed  to  profit  by  the  fraud  of  his  agent ;  and  if 
he  adopts  the  contract  made  in  his  behalf,  although  igno- 
rant of  the  fraud,  he  should  be  held  liable  to  make  com- 
pensation to  the  party  injured  by  it." 12 

§  256.    Acceptance  of  Proceeds  Test  of  Liability. 

In  Krumm  v.  Beach,  96  N.  Y.  398  (1884),  the  contract 
of  sale  was  made  by  the  agent  in  his  own  name,  without 
the  knowledge  of  the  principal,  and  all  the  fraudulent 
representations  came  from  the  agent  and  were  unknown 
to  the  principal  until  after  the  conveyance.  Held,  the 
receipt  and  retention  by  the  principal  of  the  fruits  and 
product  of  a  fraud  involves  a  liability  on  account  of  it, 

"Citing  Bennett  v.   Judson,   21   N.    T.    238    (1860). 

» Citing  Sandford  v.  Handy,  23  Wend.  260 ;  Griswold  v.  Haren,  25  N.  Y.  595 ; 
Indianapolis,  etc..  B.  B.  Co.  v.  Tyne,  63  N.  Y.  653. 


LIABILITY   OF   BROKER   AND   PRINCIPAL.  265 

although  the  principal  is  innocent  of  personal  participa- 
tion in  the  wrong.  The  defrauded  vendee  may  rescind 
the  contract  and  recover  back  his  consideration  after  an 
offer  to  reconvey  and  a  tender  of  what  had  been  received, 
or  he  may  stand  upon  the  contract  and  require  of  the 
vendor  its  complete  performance  or  such  damages  as 
would  be  the  equivalent  of  that  complete  performance.13 
In  another  case  where  fraudulent  representations  by 
agents  as  to  rents  were  relied  upon  as  giving  the  vendee 
the  right  to  rescind  the  contract,  it  was  held  that  the 
vendor  must  in  some  way  be  connected  with  the  fraud  be- 
fore such  relief  would  be  given.14  In  this  case  the  agents 
were  not  employed  by  the  vendor  and  their  statements 
as  to  rentals  were  not  authorized  by  him  nor  known  to 
him. 

§  257.    Fraud  of  Agent.    Pleading. 

Where  the  false  representations  are  made  through 
an  agent  and  the  principal  is  sued,  it  is  unnecessary  to 
allege  any  agency  in  the  making  of  the  representations. 
A  simple  allegation  that  they  were  made  by  the  defend- 
ant is  appropriate.15  Although  an  act  is  done  through 
an  agent,  it  should  be  alleged  as  done  by  the  principal, 
leaving  the  method  of  doing  it  to  the  proof.16 

"Krnmm  v.   Beach,   96  N.   Y.   398    (1884). 
"Rothstein   v.    Isaac,    124   App.    Div.    133    (N.    T.    1908). 

16  Harlow  Y.  Haines,  63  Misc.  98  (N.  Y.  1909).  And  see  1C  Ency.  of  PI.  &  Pr., 
901-904. 

"  Moffett  v.  Jaffe,   132  App.  Div.  7  (N.  Y.  1909). 


CHAPTER  XXVII. 
LIABILITY  OF  PRINCIPAL  TO  THIRD  PARTIES. 

§  258.    General  Statement. 

The  principal  is  liable  generally  to  third  parties  for 
the  torts  of  his  agent  in  the  course  of  his  employment, 
but  not  for  the  willful  trespass  of  his  agent,  committed 
without  color  of  right  or  semblance  of  authority. 
(§§  260-262.) 

The  principal,  whether  known  or  unknown,  may  be 
held  on  a  contract  made  with  authority  by  an  agent, 
though  in  the  agent's  name,  unless  exclusive  credit  is 
given  to  the  agent.  (§  263.) 

Subject  to  certain  limitations,  notice  to  the  agent  is 
notice  to  the  principal.  (§§  264-266.) 

There  is  a  difference  of  opinion  as  to  whether  accept- 
ance of  a  bonus  by  the  agent  affects  the  principal's  se- 
curity. (§  267.) 

§  259.    Scope  of  Chapter. 

In  the  present  work  devoted  primarily  to  the  law  re- 
lating to  real  estate  brokers,  it  is  impossible  to  do  more 
than  present  the  most  general  principles  bearing  upon 
the  liability  of  a  principal  to  third  parties  for  the  acts 
of  his  agent.  The  law  applicable  to  the  relation  of  prin- 
cipal and  agent  generally,  is  of  such  magnitude  that  emi- 
nent writers  have  devoted  entire  volumes  to  it,  and  for 
any  detailed  investigation  reference  should  be  had  to  the 
works  of  these  writers.1 

1  Story  on  Ag.  ;  Mechem  on  Ag. ;  Clark  &  Skyles  on  Ag. ;  Reinbard  on  Ag. ;  Huff- 
cut  on  Ag. 

266 


LIABILITY    OF    PRINCIPAL    TO    THIRD    PARTIES.  267 

§  260.    Liability  of  Principal  for  Agent's  Wrongdoing. 

"  The  principal  is  liable  in  a  civil  suit  to  third  per- 
sons for  the  frauds,  deceits,  concealments,  misrepresen- 
tations, torts,  negligences  and  other  malfeasances  and 
misfeasances  of  his  agent  in  the  course  of  his  employ- 
ment, although  the  principal  did  not  authorize,  justify 
or  participate  in,  or  indeed  know  of  such  misconduct,  or 
even  if  he  forbade  the  acts,  or  disapproved  of  them. 
This  rule  of  liability  is  not  based  upon  any  presumed 
authority  in  the  agent  to  do  the  act,  but  upon  the  ground 
of  public  policy,  and  that  it  is  more  reasonable  where 
one  of  two  innocent  persons  must  suffer  from  the  wrong- 
ful act  of  a  third  person,  that  the  principal  who  has 
placed  the  agent  in  the  position  of  trust  and  confidence 
should  suffer  than  a  stranger.  All  that  is  nec- 

essary to  render  the  principal  liable  for  the  malfeasance 
or  torts  of  the  agent  is  that  the  tort  must  be  committed 
in  the  course  of  the  agency;  not  that  the  agency  author- 
ized it,  or  *  *  *  that  the  employment  afforded  the 
means  of  committing  the  injury."2  The  principal  is 
not,  however,  liable  for  the  willful  trespass  of  his  agent, 
committed  without  color  of  right  or  semblance  of  author- 
ity.3 

§  261.    Liability  of  Principal  who  Accepts  Benefits  of 
Agent's  Acts. 

Acceptance  by  the  principal  of  the  fruits  of  the 
agent's  efforts,  though  the  principal  be  innocent,  may 
place  the  principal  in  a  position  where  he  will  be  re- 
garded as  having  assumed  responsibility  for  the  instru- 
mentalities which  the  agent  has  employed  to  effect  the 
transaction.4 

2  Lee  v.   Village  of  Sandy  Hill.  40  N.  Y.  448   (I860).     But  see  §  271  infra. 
SLee   v.    Villase   of   Sanrty   H1H,    40    N.    Y.    448    (1869);    Erie  City    Iron   Works   Y. 
Barber.    106  Pa.   St.    138    (1884).     See  also  Wheeler  v.   McGulre,   2  L.   B.  A.   810    (Ala. 

1888). 

«  See  §§   254-257  supra. 


268  PRINCIPAL   AND    AGENT. 

§  262.    Liability  of  Principal  for  Agent's  Contracts. 

The  liability  of  the  principal  on  contracts  made  by 
an  agent  depends  upon  the  authority  of  the  agent.  The 
authority  may  be  real  or  only  apparent;  the  agent  may 
be  a  general  agent  or  a  special  agent,  and  upon  these 
conditions  depend  the  determination  of  whether  or  not 
the  agent  exceeded  his  authority.5 

Where  a  broker  contracts  as  agent  for  a  principal 
who  is  named,  the  principal  is  liable  to  the  party  with 
whom  the  contract  is  made  if  the  agent  acted  within  the 
scope  of  his  actual  authority,  or  if  the  agent  acted  within 
an  apparent  authority,  with  which  he  was  clothed  by  the 
principal,  even  though  the  act  be  contrary  to  private  in- 
structions and  limitations  not  known  to  the  other  party.6 

"It  is  a  general  principle  of  law  of  agency  that  a 
principal  is  not  bound  by  the  acts  of  the  agent  not  within 
the  actual  or  apparent  scope  of  the  agency,  simply  be- 
cause the  agent  falsely  asserts  that  they  are  within  it." 7 

' '  If  the  agency  is  special,  and  is  known,  it  is  the  duty 
of  the  person  dealing  with  the  agent  to  inquire  into  the 
nature  and  extent  of  the  authority  conferred,  and  to  deal 
with  the  agent  accordingly.  Where  the  special  character 
of  the  agent  is  not  known,  and  the  principal  has  clothed 
the  agent  with  apparent  powers,  strangers,  in  dealing 
with  the  agent,  may  assume  that  such  apparent  powers 
are  possessed.  The  principal  cannot,  by  private  com- 
munications with  his  agent,  limit  the  authority  which  he 
allows  the  agent  to  assume."8  The  question  of  the 
authority  of  a  real  estate  broker  to  enter  into  a  contract 
of  sale  has  already  been  presented. 9 

"  The  authority  of  a  general  agent  may  be  more  or 

"  See  Wheeler  v.   McGnire.   2  L.   B.   A.   808    (Ala.    1888). 

6  Clark  on  Contracts,  731.  See  also  Ch.  IV  supra  as  to  broker's  authority  to  sign 
contract. 

T  Benedict  v.  Pell,  70  App.  Dlv.  45  (N.  Y.  1902),  (citing  Edwards  v.  Dooley,  120 
N.  Y.  540  (1890)  ). 

8  Clark  on   Contracts,   p.   734. 

•  See  Ch.  IV  supra  as  to  broker's  power  to  sign  contract. 


LIABILITY   OF   PRINCIPAL   TO    THIRD   PARTIES.  269 

less  extensive;  and  he  may  be  more  or  less  limited  in 
his  action  within  the  scope  of  it.  The  limitation  of  his 
authority  may  be  public  or  private.  If  it  be  public, 
those  who  deal  with  him  must  regard  it,  or  the 
principal  will  not  be  bound.  If  it  be  private,  the  prin- 
cipal will  be  bound,  when  the  agent  is  acting  within  the 
scope  of  his  authority,  although  he  should  violate  his 
secret  instructions.  A  special  agent  is  one  employed  for 
a  particular  purpose  only.  He  also  may  have  a  general 
authority  to  accomplish  that  purpose,  or  be  limited  to  do 
it  in  a  particular  manner.  If  the  limitation  respecting 
the  manner  of  doing  it  be  public  or  known  to  the  person 
with  whom  he  deals,  the  principal  will  not  be  bound  if  the 
instructions  are  exceeded  or  violated.  If  such  limitation 
be  private,  the  agent  may  accomplish  the  object  in  viola- 
tion of  his  instructions,  and  yet  bind  his  principal  by  his 
acts."10 

§  263.    Liability  of  Undisclosed  Principal. 

When  property  is  sold  to  a  person  whom  the  vendor 
believes  to  be  a  purchaser,  and  he  afterwards  discovers 
that  the  person  credited  bought  as  agent  for  another, 
the  vendor  has  a  cause  of  action  against  the  principal  for 
the  purchase  price.11  Thus,  where  a  person  knows  that 
the  owner  of  a  particular  property  will  not  sell  to  him, 
and  therefore  has  another  person  act  as  agent  and  buy 
in  the  property  in  the  agent's  name,  the  agent's  mind  is 
the  principal 's  mind  in  the  transaction,  and  the  principal 
may  be  held  for  the  balance  of  the  unpaid  purchase 
price.12 

"As  a  general  rule,  where  a  written  agreement  not 
under  seal  is  made  on  behalf  of  a  principal  not  named, 
and  the  consideration  has  moved  from  him,  it  is  compe- 

»  Bryant  v.  Moore.   26  Me.  86,   87   (1846>. 

"  Kayton  v.  Barnett,  116  N.  Y.  625  (1889) ;  Borcherling  v.  Katz,  37  N.  J.  Eq. 
153  (1883). 

12  Kayton  v.   Barnett,  supra. 


270  PRINCIPAL   AND   AGENT. 

tent  for  the  principal  to  bring  an  action  in  his  own  name 
on  such  agreement,  thus  made  for  his  benefit ;  and,  on  the 
other  hand,  even  when  the  agent  may  himself  be  liable 
upon  a  written  contract,  because  he  has  failed  fully  to 
disclose  that  he  has  made  it  on  behalf  of  another,  the 
principal  on  whose  behalf  he  has  made  it  may  also  be 
liable."13 

"  If  an  agent  possessing  due  authority  makes  a  con- 
tract in  his  own  name,  his  principal,  whether  known  or 
unknown,  may  be  sued  thereon,  unless  from  the  attend- 
ant circumstances  it  is  the  clear  intent  of  the  parties  that 
exclusive  credit  is  given  to  the  agent,  and  that  no  resort 
shall  in  any  event  be  had  against  the  principal."14 
Where  credit  is  given  to  an  agent  without  knowledge  that 
there  is  any  principal,  the  principal,  when  discovered, 
may,  at  the  election  of  the  other  party,  be  held  on  the 
contract  if  the  election  is  exercised  within  a  reasonable 
time.15 

If  the  principal  claims  that  the  seller  knew  him  to  be 
such  (principal)  and  gave  credit  exclusively  to  the  agent, 
he  assumes  the  burden  of  establishing  this  by  clear  proof, 
the  assumption  being  that  the  credit  is  given  to  the  prin- 
cipal.16 There  are  exceptions  to  the  rule  that  an  undis- 
closed principal  may  both  sue  and  be  sued  upon  a  con- 
tract made  in  his  behalf.  The  exceptions,  so  far  as  they 
affect  real  estate  brokers'  contracts,  have  already  been 
noted.17 

§  264.    Notice  to  Agent  as  Notice  to  Principal. 

The  principal  is  chargeable  with  all  the  knowledge 
the  agent  possesses  in  the  transaction  of  the  business  he 

M  Nat.  Life  Ins.  Co.  v.  Allen,  116  Mass.  400  (1874),  (citing  Huntington  v.  Knox, 
7  Cnsh.  371,  374;  Exchange  Bk.  v.  Rice,  107  Mass.  37,  43). 

"Davis  v.  Lynch,  31  Misc.  724   (N.  Y.  1900). 

**  City  Trust.  Safe  Dep.  &  Surety  Co.  v.  American  Brewg.  Co.,  70  App.  Dlv.  511 
(N.  Y.  1902)  ;  aff'd,  174  N.  Y.  486  (1903)  ;  Mississippi  Valley  Const.  Co.  v.  Abeles,  112 
S.  W.  894  (Ark.  1908). 

»«  Wasserman  v.  Bacon,  80  App.  Dlv.  505  (N.  Y.  1903). 

"  See  §   46  supra. 


LIABILITY   OF   PRINCIPAL   TO   THIRD   PARTIES.  271 

has  in  charge.18  Or  as  another  case  puts  it,  a  principal 
is  chargeable  with  notice  of  all  such  facts  as  come  to  his 
agent's  knowledge,  whilst  acting  within  the  scope  of  his 
agency.19 

When  the  members  of  a  partnership  are  appointed 
agents,  they  are  joint  agents.  Notice  to  one  of  two  or 
more  joint  agents  is  notice  to  all.20 

"  In  an  action  between  vendor  and  vendee,  knowledge 
possessed  by  either  the  principal  or  the  agent  is,  respec- 
tively, imputable  to  each  other."21  The  rule  rests  upon 
the  duty  of  the  agent  to  disclose  to  the  principal  all  the- 
material  facts  coming  to  his  knowledge  with  reference 
to  the  subject  of  his  agency  and  upon  the  presumption 
that  he  has  discharged  that  duty.  *  *  An  agent  owes  a  duty 
to  his  principal  to  disclose  to  him  any  information  which 
he  may  have  which  may  be  relevant  to  that  agency.  The 
law  conclusively  presumes  that  the  agent  makes  such  dis- 
closure, unless  the  agent  has  some  private  purpose  to 
accomplish,  the  accomplishment  of  which  would  be  im- 
periled thereby."22 

§  265.    When  Notice  to  Agent  is  Not  Notice  to  Principal. 

The  presumption  as  to  disclosure  does  not  always 
arise,  for  there  are  several  exceptions.23  When  the  agent 
has  no  legal  right  to  disclose  a  fact  to  his  principal,  or 
he  is  engaged  in  a  scheme  to  defraud  his  principal,  the 
presumption  does  not  prevail.24 

« Adams  v.   Mills,   60  N.   Y.   539    (1875). 

"Kauffman  v.  Bobey,  60  Tex.  310  (1883),  (citing  Jones  v.  Banford,  21  Iowa  217; 
Fulton  Bfe.  v.  Canal  Co.,  4  Paige  127 ;  Swell's  Evans  on  Agency,  164 ;  Le  Neve  v.  Le 
Neve,  2  Lead.  Cases  in  Eq..  pt.  1.  167,  168). 

»  Whittenbrock  v.  Parker.  102  Cal.  100  (1894),  (citing  Wade  on  Law  of  Notice. 
§  681;  Fulton  Bk.  v.  N.  Y..  etc..  Canal  Co.,  4  Paige  (N.  Y.)  127;  North  River  Bk.  v. 
Ayman.  3  Hill  (N.  Y.)  262;  Bank  of  U.  S.  v.  Davis,  2  Hill  451;  Natl.  Security  Bk.  v. 
Cushman,  121  Mass.  490). 

"Mayer  v.    Dean.    115   N.   Y.   560   (1889). 

22  Crooks  v.  People's  Natl.  Bk.,  72  App.  Dlv.  335  (N.  Y.  1902).  See  also  §  248 
supra. 

»  Henry  v.  Allen,   151  N.  Y.  1   (1896). 

"Id.  ;  Kanffman  v.  Robey,  60  Tex.  311  (1883),  (citing  Winchester  v.  Snsqaehanna 
R.  Co.,  4  Md.  231;  La  Farge  Ins.  Co.  v.  Bell.  22  Barb.  (N.  Y.)  54;  McCormlck  T. 
Wheeler.  36  111.  114). 


272  PRINCIPAL   AND   AGENT. 

In  Pine  Mountain  Iron  Co.  v.  Bailey,  94  Fed.  Rep. 
258  (1899),  the  court  said:  "  The  rule  that  notice  to  the 
agent  is  notice  to  the  principal  has  an  exception  as  well 
established  as  the  rule  itself.  It  is  that  when  the  agent 
acts  for  himself,  in  his  own  interest,  and  adversely  to  his 
principal  *  neither  notice  to  nor  the  knowledge 

of  the  agent  can  be  lawfully  imputed  to  the  principal.25 
The  reason  of  the  general  rule  is  that  it  is  the  duty  of 
the  agent  to  communicate  to  his  principal  the  facts  rela- 
tive to  any  transaction  in  which  he  acts  on  his  behalf, 
and  that  the  law  presumes  that  he  has  discharged  his 
duty.  But  when  the  nominal  agent  commences  to  act  in 
his  own  interest,  and  adversely  to  his  principal,  the  pre- 
sumption no  longer  obtains  that  he  will  communicate  to 
him  facts  which  might  prevent  the  consummation  of 
the  negotiation  which  he  is  conducting  on  his  own  be- 
half, and  the  counter  presumption  that  he  will  conceal 
them  arises.  As  the  reason  for  the  rule  no  longer 
exists,  the  rule  ceases  to  apply,  and  the  exception 
prevails. ' ' 

In  Benedict  v.  Arnoux,  154  N.  Y.  728  (1897),  it  was 
claimed  that  the  knowledge  of  the  agent  was  imputable 
to  the  principal.  The  court  said:  "  This  is  true  to  a 
limited  extent ;  so  long  as  the  agent  acts  within  the  scope 
of  his  employment  in  good  faith,  for  the  interest  of  his 
principal  he  is  presumed  to  have  disclosed  to  his  prin- 
cipal all  the  facts  that  come  to  his  knowledge  as  agent; 
but  just  as  soon  as  the  agent  forms  the  purpose  of  deal- 
ing with  his  principal's  property  for  his  own  benefit 
and  advantage,  or  for  the  benefit  and  advantage  of  other 
persons  who  are  opposed  in  interest,  he  ceases,  in  fact, 
to  be  an  agent  acting  in  good  faith  for  the  interest  of  his 

28  Citing  American  Surety  Co.  v.  Pauly,  170  U.  S.  133,  156 ;  18  Sap.  Ct.  552 ; 
Frenkel  v.  Hudson.  82  Ala.  158;  2  So.  758;  Waite  v.  City  of  Santa  Cruz.  89  Fed.  619, 
630;  Barnes  v.  Gas  Light  Co..  27  N.  J.  Eq.  33.  37:  Winchester  v.  R.  R.  Co.,  4  Md.  231, 
241  ;  Davis  Improved  Wrought  Iron  Wagon  Wheel  Co.  v.  Davis  Wrought  Iron  Wagon  Co., 
20  Fed.  699,  702;  Thomson-Houston  Electric  Co.  v.  Capital  Elec.  Co.,  56  Fed.  849,  853; 
Commercial  Bank  v.  Cunningham,  24  Pick.  270,  276 ;  Mechem  on  Agency,  §  723. 


LIABILITY   OF    PRINCIPAL   TO    THIRD    PARTIES.  273 

principal  and  his  action  thereafter  based  upon  such  pur- 
pose is  deemed  to  be  in  fraud  of  the  rights  of  his  prin- 
cipal, and  the  presumption  that  he  has  disclosed  all  the 
facts  that  have  come  to  his  knowledge  no  longer  pre- 
vails. ' '  The  court  then  quotes  from  Henry  v.  Allen,  151 
N.  Y.  1  (1896).  But  "  a  principal  who  knows  that  his 
agent  is  also  acting  as  agent  for  the  party  adversely  in- 
terested in  a  transaction  with  him,  and  yet  consents  that 
he  may  act  as  his  agent,  is  estopped  from  denying  the 
notice  and  knowledge  which  the  agent  has  during  the 
negotiation."26 


§  266.    Agent's  Knowledge  Obtained  in  Other  Trans- 
actions. 

As  to  how  far  a  principal  is  held  chargeable  with 
knowledge  of  facts  communicated  to  his  agent,  where  the 
notice  was  not  received  or  the  knowledge  obtained  in  the 
very  transaction  in  question,  there  is  conflict.27 

It  has  been  held  that  "  notice  to  and  the  knowledge 
of  the  agent  or  attorney  acquired  in  prior  transactions, 
and  present  in  his  mind  while  he  is  exercising  the  powers 
and  discharging  the  duties  of  his  agency,  are  notice  to 
and  the  knowledge  of  his  principal. ' ' 28  On  the  other 
hand,  it  is  said  "  that  he  (the  principal)  is  not  charge- 
able with  notice  of  such  facts  if  they  come  to  the  knowl- 
edge of  his  agent  whilst  engaged  in  a  transaction  with 
which  the  principal  has  no  concern,  is  equally  well 
settled  "  as  that  the  principal  is  chargeable  with  notice 
of  all  such  facts  as  come  to  his  agent's  knowledge  while 
acting  within  the  scope  of  his  agency.29 

a>  Pine  Mountain  Co.  v.  Bailey,  94  Fed.  260  (1899),  (citing  Astor  v.  Wells.  4  Wheat. 
466-  Fitzsimmons  v.  Express  Co.,  40  Ga.  330,  336;  Alexander  T.  University,  57  Ind.  466, 
476 ;  Leekins  v.  Nordyke,  66  Iowa  471,  475 ;  24  N.  W.  1  ;  Adams  Mining  Co.  T.  Senter, 

27  ge^   Constant   v.    University  of   Rochester.    Ill    N.    T.    611    (1888) ;    Kauffman    v. 
Robey.  60  Tex.  311   (1883)  ;  Wittenbeck  v.  Parker,  102  Cal.  100-103  (1894). 
SB  Pine  IKountain   Co.   v.   Bailey,   94  Fed.   260    (1899). 
»  Kauffman  v.  Robey,  supra. 


274  PRINCIPAL   AND   AGENT. 

§  267.    Usury  of  Agent. 

While  the  rule  prevails  in  some  states  that  a  loan  is 
not  rendered  usurious  by  the  fact  that  the  lender 's  agent, 
without  his  authority,  knowledge  or  participation,  ex- 
torted money  from  the  borrower  upon  the  false  pretense 
that  part  of  it  was  a  bonus  for  his  principal,30  the  con- 
trary or  a  modified  view  is  taken  in  others.31 

»E8tevez  v.  Purdy,  66  N.  Y.  446  (1876).  See  also  Bell  v.  Day,  32  N.  Y.  168 
(1865);  Algur  v.  Gardner,  54  N.  Y.  360  (1873);  Condlt  v.  Baldwin,  21  N.  Y.  219 
(I860). 

11  See  Clark  &  Skyles  on  Agency,  p.  1126.  The  following  cases  bear  on  the  subject: 
Sherwood  v.  Roundtree,  32  Fed.  Rep.  113;  Borcherllng  v.  Terfz.  40  N.  J.  Eq.  502;  White 
v.  Dwyer,  31  N.  J.  Eq.  40;  Condert  v.  Flagg,  31  N.  J.  Eq.  394;  Phillips  v.  Roberts,  90 
111.  492;  Payne  v.  Newcomb,  100  111.  611;  Meers  v.  Stevens,  106  111.  549;  Cox  v.  Life 
Ins.  Co.,  113  111.  382;  Boylston  v.  Bain.  90  111.  283;  Wyllis  v.  Ault,  46  Iowa  46;  New 
England  Co.  v.  Hendrickson,  13  Nebr.  574 ;  Cheney  v.  White,  5  Nebr.  261. 


CHAPTER  XXVIII. 
LIABILITY  OF  BROKER  TO  THIRD  PARTIES. 

§  268.    General  Statement. 

An  agent  is  not  liable  to  third  parties  for  moneys 
properly  received  by  him  in  the  name  and  in  the  business 
of  the  principal.  (§270.) 

For  misfeasance  the  agent  is  generally  liable  to  third 
parties  suffering  thereby.  (§  271.) 

If  the  agent  act  without  authority,  or  beyond  it,  he 
becomes  personally  liable.  (§§  272-276.) 

Where  an  agent  makes  a  contract  he  impliedly  agrees 
that  he  is  authorized  to  make  it.  (§§  272-275,  277.) 

An  agent  in  order  to  release  himself  from  liability, 
should  disclose  his  principal.  (§  277.) 

In  New  York  an  unlawful  intrusion  on  real  property 
is  a  misdemeanor,  and  it  is  also  a  criminal  offense  for 
one  to  affix  an  advertisement  to  real  property  without  the 
owner's  consent.  (§  278.) 

§  269.    Scope  of  Chapter. 

In  regard  to  the  liability  of  agents  to  third  parties,  it 
may  be  said  that  the  general  subject  is  of  too  great  mag- 
nitude to  be  more  than  touched  upon  here.  For  a  full 
consideration  of  the  subject,  the  special  works  on  agency 
should  be  consulted.1 

§  270.    Liability  of  Agent  for  Moneys  Received. 

"An  agent  to  whom  money  has  been  paid  with  a  di- 
rection to  hand  it  over  to  a  third  person,  is  accountable 

*  See  {  259  supra. 

275 


276  PBINCIPAL   AND   AGENT. 

only  to  his  principal,  and  not  to  such  third  person,  unless 
he  has  entered  into  a  binding  engagement  with  such  third 
person  which  has  given  the  latter  a  right  of  action 
against  him. "  2  In  Fisher  v.  Meeker,  118  App.  Div.  452, 
454  (N.  Y.  1907),  it  was  held  that  an  agent  acting  within 
the  scope  of  his  authority  cannot  be  held  liable  by  per- 
sons other  than  his  principal  for  moneys  properly  re- 
ceived by  him  in  the  name  and  in  the  business  of  the 
principal.  Thus,  where  the  plaintiff  purchased  goods  of 
the  defendant  as  agent  to  whom  he  paid  the  purchase 
price  without  any  express  promise  by  the  agent  to  pay 
the  sum  to  the  principal  and  thereafter  on  demand  by 
the  principal  again  paid  a  portion  of  the  purchase  money, 
he  cannot  recover  the  overpayment  from  the  agent.  This, 
because  payment  to  an  agent  who  has  authority  to  col- 
lect, is  payment  to  the  principal  and  an  absolute  dis- 
charge of  the  debt,  and  it  is  of  no  consequence  to  the 
debtor  that  the  agent  fails  to  account  to  the  principal. 

In  the  case  cited,3  the  court  said :  ' '  The  case  of  Smith 
v.  President,  etc.,  of  Essex  County  Bank,  22  Barb.  (N.Y.) 
627,  is  a  distinct  authority  against  the  right  to  sustain 
such  an  action.  It  was  there  held  that  a  payment  to  an 
agent  who  has  authority  to  collect  is  a  payment  to  the 
principal  and  an  absolute  discharge  of  the  debt,  and  that 
it  is  a  matter  of  no  sort  of  consequence,  so  far  as  the 
debtor  is  concerned,  whether  the  agent  accounts  for  it  or 
misapplies  it.  In  the  case  of  Hall  v.  Lauderdale,  46  N. 
Y.  70,  it  was  held  that  an  action  cannot  be  maintained 
against  an  agent,  although,  having  money  of  his  prin- 
cipal in  his  hands  applicable  to  the  payment  of  the  debt 
of  his  principal,  he  refuses  to  pay  it.  The  court,  through 
Judge  Andrews  said:  'The  defendant  was  responsible  to 
the  principal,  and  to  the  principal  alone,  for  any  omis- 
sion or  neglect  of  duty  in  the  matter  of  his  agency. '  The 

•Note  In  Wells  v.  Collins,  5  L.  R.  A.  531    (Wls.   1899). 
•Fisher  v.   Meeker,    118  App.   Div.  452,  454    (N.  Y.   1907). 


LIABILITY   OF   BROKER   TO   THIRD   PARTIES.  277 

case  of  Colvin  v.  Holbrook,  2  N.  Y.  126,4  recognizes  this 
same  principle.  The  court  there  said : '  The  rule,  it  is  be- 
lieved, is  universal,  that  a  known  agent  is  not  responsible 
to  third  persons  for  acts  done  by  him  in  pursuance  of  an 
authority  rightfully  conferred  upon  him.  The  very  no- 
tion of  an  agency  proceeds  upon  the  supposition  that 
what  a  man  may  lawfully  do  by  a  substitute,  when  per- 
formed, is  done  by  himself,  and  the  individuality  of  the 
agent  so  far  is  merged  in  that  of  the  principal.  It  is  also 
settled,  if  anything  can  be  established  by  authority,  that 
an  agent  is  not  liable  to  third  persons  for  an  omission  or 
neglect  of  duty  in  the  matter  of  his  agency,  but  that  the 
principal  is  alone  responsible. ' 5  There  is  a  class  of 
cases  *  *  *  in  which  the  responsibility  of  agents  and 
servants  has  been  upheld.  They  are  cases  where  the 
principal  had  no  right  to  receive  the  money,  and,  of 
course,  could  confer  none  upon  the  agent,  or  where  it  was 
paid  by  mistake,  or  where  the  agent  exceeded  his  au- 
thority, or  was  guilty  of  misfeasance,  not  as  an  agent  or 
servant  but  as  a  wrong  doer,  or  where  payment  was  in- 
duced by  a  wrongful  act  of  the  agent  or  there  was  an 
explicit  agreement  to  return  it." 

§  271.    Liability  of  Agent  for  Misfeasance  and  Non- 
feasance. 

"In  Van  Antwerp  v.  Linton,  89  Hun  (N.  Y.)  417,  419, 
the  court,  per  Parker  J.,  say:  'as  between  himself  and  his 
master  he  is  bound  to  serve  him  with  fidelity,  and  for  a 
breach  of  his  duty  he  becomes  liable  to  the  master,  who 
in  turn  may  be  charged  in  damages  for  injuries  to  third 
persons  occasioned  by  the  nonfeasance  of  the  servant. 
For  misfeasance  the  agent  is  generally  liable  to  third  par- 
ties suffering  thereby.  The  distinction  between  non- 
feasance  and  misfeasance  has  been  expressed  by  the 

*  Criticised  In  note  In  28  L.   B.  A.  433. 

•  Citing  Cooper  v.  Tim,  16  Misc.  (N.  Y.)  372. 


278  PBINCIPAL  AND   AGENT. 

courts  of  this  State  (New  York)  as  follows:  "If  the  duty 
omitted  by  the  agent  or  servant  devolved  upon  him 
purely  from  his  agency  or  employment,  his  omission  is 
only  of  a  duty  he  owes  his  principal  or  master,  and  the 
master  alone  is  liable.  While  if  the  duty  rests  upon  him 
in  his  individual  character  and  was  one  that  the  law  im- 
posed upon  him  independently  of  his  agency  or  employ- 
ment, then  he  is  liable."  Burns  v.  Pathcal,  75  Hun  (N. 
Y.)  433.'  The  judgment  was  affirmed  on  the  opinion  be- 
low (157N.  Y.  716). "8 

Agents  for  renting  property  and  collecting  rents  are 
not  liable  for  injuries  to  third  persons  sustained  on  the 
property,  unless  such  agents  are  themselves  guilty  of 
misfeasance.7 

In  an  Illinois  case,8  the  agents  were  subjected  to  lia- 
bility under  the  following  circumstances:  certain  real 
estate  brokers  were  agents  for  renting  certain  premises 
and  had  complete  control  thereof,  repairing  same  in  their 
discretion.  They  rented  the  property  and  by  the  lease 
the  tenants  covenanted  to  keep  the  premises  in  repair. 
At  the  time  of  renting,  however,  the  premises,  and  es- 
pecially a  door  thereon,  were  in  need  of  repair,  and  the 
agents  agreed  to  repair  it.  This  was  not  done,  and  an 
expressman  delivering  goods  on  the  premises  was  so  in- 
jured by  the  falling  of  this  door  that  he  died.  The  court 
in  holding  the  agents  responsible  said:  "An  agent  is  lia- 
ble to  his  principal  only  for  mere  breach  of  his  contract 
with  his  principal,  but  he  must  have  due  regard  to  the 
rights  and  safety  of  third  persons.  He  cannot  in  all 
cases  find  shelter  behind  his  principal.  *  *  *  It  was  not 
his  contract  with  the  principal  which  exposes  him  to  or 

9  Dunham  v.  City  Trust  Co.,  115  App.  DIv.  588  (N.  Y.  1906).  See  also  Hagerty  v. 
Montana  Ore  Purch.  Co.,  98  Pac.  643  (Mont.  1908),  (referring  to  Ellis  v.  McXaughton, 
76  Mich.  237;  42  N.  W.  1113;  15  Am.  St.  Rep.  308;  Baird  v.  Shipman,  132  111.  16;  23 
N.  E.  384  ;  7  L.  R.  A.  128 ;  22  Am.  St.  Rep.  504  ;  Mayer  v.  Thompson-Hutchinson  Bldg. 
Co.,  104  Ala.  611;  16  So.  620;  28  L.  R.  A.  433;  53  Am.  St.  Rep.  88).  See  critical  note 
in  Mayer  v.  Thompson  Co.,  28  L.  R.  A.  433  (1894),  and  see  also  Hodgson  v  St.  Paul 
Plow  Co.,  50  L.  R.  A.  644. 

i  Minnls  v.   Younker,   118  N.  W.   532   (Iowa  1908). 

«  Baird  v.   Shipman,   132  111.   16 ;  7  L.   R.  A.   128   (1890). 


LIABILITY   OF   BROKER   TO   THIRD   PARTIES.  279 

protects  him  from  liability  to  third  persons,  but  his  com- 
mon-law obligation  to  so  use  that  which  he  controls  as 
not  to  injure  another.  That  obligation  is  neither  in- 
creased nor  diminished  by  his  entrance  upon  the  duties 
of  agency,  nor  can  its  breach  be  excused  by  the  plea  that 
his  principal  is  chargeable.  If  the  agent  once  actually 
undertakes  and  enters  upon  the  execution  of  a  particular 
work,  it  is  his  duty  to  use  reasonable  care  in  the  manage- 
ment of  executing  it,  so  as  not  to  cause  any  injury  to  third 
persons  which  may  be  the  natural  consequence  of  his 
acts;  and  he  cannot  escape  this  duty  by  abandoning  its 
execution  midway  and  leaving  things  in  a  dangerous  con- 
dition by  reason  of  his  having  so  left  them  without 
proper  safeguards."9  The  court  then  quotes  from 
Mechem  on  Agency,  §  572,  to  the  effect  that  while  an 
agent  may  not  be  liable  to  third  persons  for  not  doing 
that  which  is  imposed  upon  him  by  virtue  of  his  relation, 
he  is  so  responsible  for  that  which  is  imposed  upon  him 
by  law,  i.  e.,  the  same  "not  doing"  which  constitutes  ac- 
tionable negligence  in  any  relation.10  The  court  also 
refers  to  Campbell  v.  Portland  Sugar  Co.,  62  Me.  552,  as 
a  parallel. 

The  agents'  liability  in  the  case  of  Baird  v.  Shipman 
is  put  upon  the  ground  that  when  they  rented  the  prem- 
ises to  the  tenant  in  a  dangerous  condition,  they  volun- 
tarily set  in  motion  an  agency  which,  in  the  ordinary  and 
natural  course  of  events  would  expose  to  injury  persons 
entering  the  barn  where  the  accident  occurred.  If  the 
insecure  condition  had  arisen  after  the  letting  to  the  ten- 
ant, the  court  said  a  different  question  would  be  pre- 
sented, "but  as  it  existed  before  and  at  the  time  of  the 
letting,  the  owner  or  persons  in  control  are  chargeable 
with  the  consequences."11 

•  Citing  Osborne  v.   Morgan.    130  Mass.   102. 

1U  Citing  Lottraan  v.  Barnett,  62  Mo.  159 ;  Martin  v.  Benolst.  20  Mo.  App.  263 ; 
Harriman  v.  Stowe,  57  Mo.  93;  Bell  v.  Josselyn,  3  Gray  309. 

"Citing  Grldley  v.  Bloomington,  68  111.  47;  Tomle  v.  Hampton,  21  N.  E.   (111.)  800. 


280  PRINCIPAL,   AND   AGENT. 

§  272.    Agent  Liable  for  Improper  Contract. 

"It  is  the  general  rule  that  an  agent,  to  avoid  per- 
sonal liability,  must  contract  in  such  a  form  as  to  give  a 
remedy  against  his  principal,  and  if  in  making  a  contract 
in  the  name  of  his  principal,  he  acts  without  authority, 
or  beyond  it,  he  becomes  personally  liable."12  "  When 
an  agent  assumes  to  act  for  an  owner,  he  must  see  to  it 
that  his  principal  is  legally  bound  by  his  act,  and  if  he 
does  not  give  a  right  of  action  against  his  principal,  the 
law  holds  him  personally  responsible."13  An  agent 
must  so  execute  his  authority  as  to  bring  about  a  con- 
tract mutually  binding  on  the  principal  and  the  party 
with  whom  he  contracts.14 

Furthermore,  the  courts  have  held  that  where  an  in- 
strument is  executed  on  behalf  of  a  body  which  has  no 
existence,  the  party  executing  the  instrument  becomes 
liable,  as  where  a  lease  was  made  on  behalf  of  "the  trus- 
tees of  the  German  American  Institute"  as  lessees  and 
signed  and  sealed,  "  for  the  Board  of  Trustees  by 
S.  Kauffmann,  treasurer,"  there  being  no  trustees  in  fact, 
and  only  a  mere  voluntary  association.15 

§  273.    Liability  of  the  Agent  on  Unauthorized  Contract. 

It  is  conceded  that  the  agent  is  liable  in  some  form 
for  entering  into  an  unauthorized  contract.  All  that  it 
is  necessary  for  the  agent  to  know,  therefore,  is  that  he  is 
liable,  and  it  will  afford  him  little  consolation  to  know 
that  he  is  not  liable  in  a  certain  form  of  action,  but  is  un- 
der another.  The  practitioner,  however,  is  interested  in 
the  form  of  the  action  he  is  expected  to  bring  under  such 

"Hall  v.  Lauderdale,  46  N.  Y.  70   (1871). 

"Harrell  v.   Veith,    13   N.   Y.   St.   Rep.   738.    740    (1888). 

™  Simmonds  v.   Moses,    100  N.   Y.    140   (1885). 

«  Bartholomae  v.  Kauffmann,  15  Jones  &  Spencer  (47  N.  Y.  Super.  Ct.)  552;  aff'd, 
91  N.  Y.  654  (1883),  no  opinion.  Similar  instances  of  liability  are  Fredenhall  v.  Taylor, 
23  Wis.  538  (1868),  where  a  "committee"  of  an  incorporated  association  acted;  Blakely 
v.  Bennecke,  59  Mo.  193  (1875),  where  signature  was  "  Louis  Bennecke,  Capt.  49th 
flegt.  Mp.  Vols.,  Comdg.  Post," 


LIABILITY   OF   BROKER   TO    THIRD   PARTIES.  281 

circumstances.  As  allowable  limits  of  space  will  not  per- 
mit of  a  prolonged  presentation,  we  quote  the  concise  but 
comprehensive  statement  contained  in  a  popular  text- 
book. 

11  An  important  exception  to  the  rule"  that  an  agent 
who  contracts,  as  agent,  for  a  named  principal,  cannot 
be  sued  on  the  contract  "  is  where  an  agent  contracts 
without  authority,  or  for  a  non-existent  or  incapable 
principal.  It  is  well  settled  that  if  a  person  contracts 
as  agent  on  behalf  of  a  principal  who  does  not  exist, 
or  who  cannot  contract,  or  if  he  enters  into  a  con- 
tract in  excess  of  his  authority,  he  is  personally  liable  in 
some  form  to  the  other  party.  Whether  he  is  liable  ex 
contractu,  or  whether  he  is  only  liable  in  tort,  is  an  un- 
settled question,  and  there  is  a  conflict  of  opinion.  In 
England  and  in  some  of  our  states,  he  is  liable  in  contract 
if  he  acted  in  good  faith  and  in  tort  if  he  acted  in  bad 
faith.  If  he  believed  that  he  had  an  authority  which  he 
did  not  in  fact  possess,  he  may  be  sued  upon  an  implied 
warranty  of  authority.  This  is  an  implied  or  feigned 
promise  to  the  other  party  that,  in  consideration  of  his 
making  the  contract,  the  professed  agent  undertakes 
that  he  has  authority  to  bind  his  principal.  'The  un- 
reality of  this  warranty  of  authority  makes  it  open  to 
criticism,  since  the  promise  therein  involved  was  prob- 
ably never  present  to  the  minds  of  either  of  the  parties 
affected  by  it.  '  Some  of  our  courts  have  taken  this  view 
of  the  question,  and  have  held  that  an  agent  acting  with- 
out authority  cannot  be  held  liable  in  contract.  'If  one 
falsely  represents  that  he  has  an  authority  by  which  an- 
other, relying  on  the  representation,  is  misled,  he  is  lia- 
ble; and  by  acting  as  agent  for  another  when  he  is  not, 
though  he  thinks  he  is,  he  tacitly  and  impliedly  repre- 
sents himself  authorized,  without  knowing  the  fact  to  be 
true,  it  is  in  the  nature  of  a  false  warranty,  and  he  is  lia- 
ble. But  in  both  cases  his  liability  is  founded  on  the 


282  PRINCIPAL   AND   AGENT. 

ground  of  deceit  and  the  remedy  is  by  action  of  tort.' 
If  the  professed  agent  knew  that  he  had  not  the  authority 
which  he  assumed  to  possess,  he  may  certainly  be  sued 
by  the  injured  party  in  an  action  for  deceit.  As  we  have 
just  seen,  some  courts  hold  that  this  is  the  injured  party's 
only  remedy,  even  where  the  professed  agent  acted  in 
good  faith."16 

In  New  York  it  is  held  that  the  liability  rests  on  the 
ground  that  the  agent  warrants  his  authority.  The  pre- 
tended agent  may  be  held  liable  in  an  action  for  deceit  or 
in  an  action  for  breach  of  warranty  as  to  his  authority. 

A  person  acting  as  agent  incurs  liability  as  follows: 
(1)  in  a  case  of  fraudulent  misrepresentation  that  he 
has  authority;  (2)  where  the  agent  has  no  authority, 
although  he  intends  no  fraud;  and  (3)  where  a  party  un- 
dertakes to  act  as  an  agent  bona  fide,  believing  that  he 
has  authority,  but  in  point  of  fact  has  no  authority  and 
therefore  acts  under  an  innocent  mistake.17 

§  274.    Ground  of  Agent's  Liability  for  Unauthorized 
Acts. 

In  a  case  already  cited,18  it  was  said:  "  'Wherever  a 
party  undertakes  to  do  any  act  as  the  agent  of  another, 
if  he  does  not  possess  any  authority  from  the  principal 
therefor  he  will  be  personally  responsible  there- 

for to  the  person  with  whom  he  is  dealing  for  or  on 
account  of  his  principal.  There  can  be  no  doubt  that 
this  is  and  ought  to  be  the  rule  of  law  in  the  case  of  a 
fraudulent  representation  made  by  the  agent,  that  he 
has  due  authority  to  act  for  the  principal;  for  it  is  an 
intentional  deceit.  The  same  rule  may  justly  apply 
where  the  agent  has  no  such  authority,  and  he  knows  it, 

» Clark  on  Contracts,  pp.  738,  739.  See  also  LeRoy  v.  Jacobosky,  136  N.  C.  443 ; 
67  L.  R.  A.  977  (1904),  where  many  authorities  are  cited. 

"Campbell  v.  Mnller,  19  Misc.  189;  43  N.  Y.  Suppl.  233  (1897).  See  also  White  v. 
Madison,  26  N.  Y.  117  (1862);  Simmonds  v.  Moses,  100  N.  Y.  140  (1885). 

18  Campbell  v.  Muller,  supra. 


LIABILITY   OF   BROKEE   TO    THIRD   PARTIES.  283 

and  he,  nevertheless,  undertakes  to  act  for  the  principal, 
although  he  intends  no  fraud.  But  another  case  may  be 
put,  which  may  seem  to  admit  of  more  doubt;  and  that 
is  where  the  party  undertakes  to  act,  as  an  agent,  for  the 
principal,  bona  fide,  believing  that  he  has  due  authority; 
but,  in  point  of  fact,  he  has  no  authority,  and  therefore 
he  acts  under  an  innocent  mistake.  In  this  last  case, 
however,  the  agent  is  held  by  law  to  be  equally  as  respon- 
sible as  he  is  in  the  two  former  cases,  although  he  is 
guilty  of  no  intentional  fraud  or  moral  turpitude.  This 
whole  doctrine  proceeds  upon  a  plain  principle  of  justice, 
for  every  person  so  acting  for  another,  by  a  natural,  if 
not  by  a  necessary,  implication,  holds  himself  out  as 
having  competent  authority  to  do  the  act;  and  he  there- 
by draws  the  other  party  into  a  reciprocal  engage- 
ment. ' 19  The  reason  why  the  agent  is  liable  in  such  case 
to  the  person  with  whom  he  contracts  is  that  the  party 
dealing  with  him  is  deprived  of  any  remedy  against  the 
principal.  The  contract,  though  apparently  with  the 
principal,  is  not  his  in  fact;  and  it  is  but  just  that  the 
loss  should  be  borne  by  the  agent  who  contracted  without 
authority.20  The  liability  of  the  agent  rests  on  the 
ground  that  he  warrants  his  authority,  not  that  the  con- 
tract is  to  be  deemed  his  own;  and  on  the  question  of 
damages  the  agent's  liability  is  not  necessarily  measured 
by  the  contract,  but  embraces  all  injury  resulting  from 
his  want  of  power,  which  was  held  to  include  the  costs  of 
an  unsuccessful  action  against  the  alleged  principal.21 
*  *  *  The  ground  and  form  of  the  agent's  liability 
have  been  the  subject  of  much  discussion,  and  there  are 
conflicting  decisions  on  the  point.  In  Pennsylvania  and 
certain  other  jurisdictions  it  has  been  held  that  when  the 

18  Citing  Story  on  Ag..  §  264;  and  referring  to  Ewell.  Evan  on  Ag..  403;  Dnsenbnry 
T.  Ellis.  3  Johns.  Cas.  (N.  Y.)  70;  White  T.  Madison.  26  N.  Y.  124;  Lord  v.  Van 
Gelder.  16  Misc.  Rep.  22;  37  N.  Y.  Supp.  668;  Farmers  Co-op.  Trust  Co.  T.  Floyd,  47 
Ohio  St.  525;  26  N.  E.  110;  Baltzen  v.  N'ieolay.  53  N.  Y.  467;  Slmmonds  v.  Moses,  100 
N.  Y.  140;  2  N.  E.  640;  Taylor  v.  Nostrand.  134  N.  Y.  108;  31  N.  E.  246. 

20  Citing  Baltzen  v.   Nicolay.  supra. 

21  Citing  Taylor  v.  Nostrand,  supra. 


284  PRINCIPAL    AND    AGENT. 

agent  makes  a  false  representation  of  his  authority,  with 
intent  to  deceive,  or  where,  with  knowledge  of  his  want 
of  authority  but  without  intending  any  fraud,  he  as- 
sumes to  act  as  though  he  were  fully  authorized,  he  is 
personally  liable  to  the  other  contracting  party  for  the 
injury  sustained,  and  such  liability  may  be  enforced 
either  by  action  on  the  case  for  deceit,  or  by  electing  to 
treat  him  as  a  principal.22  The  Court  of  Appeals  of 
this  state  (New  York)  has  held  that  *  the  later  and  better 
considered  opinion  seems  to  be  that  his  liability  when 
the  contract  is  made  in  the  name  of  the  principal,  rests 
upon  an  implied  warranty  of  his  authority  to  make  it, 
and  the  remedy  is  by  an  action  for  its  breach. ' 23 

"  In  Noe  v.  Gregory,  7  Daly  (N.  Y.)  285,  Judge  Van 
Hoesen,  delivering  the  opinion  of  the  court,  said:  '  I 
think  the  law  of  New  York  now  is  that  the  pretended 
agent  is  only  liable  to  an  action  of  deceit,  or  to  an  action 
for  breach  of  warranty  as  to  his  authority.  Either  form 
of  action  will  apprise  him  that  the  question  to  be  liti- 
gated is  his  authority  to  act  for  the  person  whom  he 
represented  to  be  his  principal,  and  he  may  come  pre- 
pared to  try  that  issue. ' 

§  275.    Warranty  of  Authority  to  Make  Contract. 

The  principle  is  applicable  to  frequent  situations.  A 
few  illustrative  cases  will  suffice  to  show  its  application. 
In  Rowland  v.  Hall,  121  App.  Div.  459  (N.  Y.  1907),  the 
agent  signed  a  contract  of  sale,  supposing  that  an  "es- 
tate "  owned  the  property,  for  he  had  dealt  with  the 
supposed  "  executor  "  of  the  estate  and  collected  the 
rents  and  managed  the  property  for  him  for  years. 
Meanwhile,  the  "  executor,"  who  had  "  power  of  attor- 
ney "  from  the  owners,  conveyed  the  property  to  a  third 

**  Citing  Krwger  v.  Pitcairn,  101  Pa.  St.  311;  8  Wait,  Act.  and  Def.,  62. 
»  Citing  Baltzen  v.   Nicolay,   53  N.  Y.  467. 


LIABILITY   OF   BROKER   TO   THIRD   PARTIES.  285 

party  and  the  third  party  refused  to  recognize  the  con- 
tract. It  was  held  that  the  agent  was  liable  for  the  pay- 
ment made  to  him  by  the  purchaser  on  account  of  the 
purchase  price. 

In  Elliott  v.  Asiel,  120  App.  Div.  829  (N.  Y.  1907), 
the  defendant  entered  into  an  agreement  to  sell  real  es- 
tate and  designated  the  vendor  as  "  Estate  of  Hannah 
Asiel,"  and  signed  the  contract  "  Jacob  Asiel,  adminis- 
trator of  the  Estate  of  Hannah  Asiel."  As  ordinarily 
an  administrator  has  nothing  to  do  with  the  real  estate 
of  the  deceased,24  and  in  this  case  the  heirs  refused  to 
recognize  the  contract,  a  dismissal  of  the  purchaser's 
complaint  was  reversed,  the  court  saying  that  the  con- 
tract was  a  personal  contract  of  Jacob  Asiel;  that  as 
administrator,  without  special  leave  of  the  surrogate,  he 
had  nothing  to  do  with  the  real  estate  and  had  no  power 
to  make  the  contract.  "  It  purported  to  be  a  contract 
of  the  estate,  and  the  administrator  by  making  it  implied 
that  he  as  administrator  was  authorized  to  make  such  a 
contract  and  was  responsible  to  the  defendant  (sic)  for 
any  damages  sustained  in  consequence  of  a  breach  of 
that  implied  agreement. ' ' 25 


§  276.    Reason  of  Liability  of  Agent  for  Unauthorized 
Acts. 

' l  The  rule,  that  the  agent  is  liable  when  he  acts  with- 
out authority,  is  founded  upon  the  supposition  that  there 
has  been  some  wrong  or  omission  on  his  part,  either  in 
misrepresenting,  or  in  affirming,  or  in  concealing  the 
authority  under  which  he  assumes  to  act."28  If  the 
agent  acts  within  his  instructions,  and  in  good  faith,  es- 
pecially when  the  facts  are  equally  known  to  both  parties, 

•*  See  §  207  supra. 

28  S<>e  as  to  broker's  authority  to  sign  contract,  Ch.  IV  supra. 

28  nail   v.   I.auderdale,   46   N.    Y.   TO   (1871). 


286  PRINCIPAL    AND    AGENT. 

he  is  not  personally  responsible  although  it  may  happen 
that  the  authority  itself  is  void.27 

In  Baltzen  v.  Nicolay,  53  N.  Y.  467  (1873),  where 
the  agent  set  up  the  statute  of  frauds,  no  written  con- 
tract having  been  made,  the  court,  after  citing  White  v. 
Madison,  26  N.  Y.  117  (1862),28  says:  "  The  reason  why 
the  agent  is  liable  in  damages  to  the  person  with  whom 
he  contracts,  when  he  exceeds  his  authority,  is  that  the 
party  dealing  with  him  is  deprived  of  any  remedy  upon 
the  contract  against  the  principal.  The  contract,  though 
in  form  the  contract  of  the  principal,  is  not  his  in  fact, 
and  it  is  but  just  that  the  loss  occasioned  by  there  being 
no  valid  contract  with  him  should  be  borne  by  the  agent 
who  contracted  for  him  without  authority.  In  order  to 
make  the  agent  liable  in  such  a  case,  however,  the  unau- 
thorized contract  must  be  one  which  the  law  would  en- 
force against  the  principal  if  it  had  been  authorized  by 
him.29  Otherwise  the  anomaly  would  exist  of  giving  a 
right  of  action  against  the  assumed  agent  for  an  unau- 
thorized representation  of  his  power  to  make  a  contract, 
when  the  breach  of  the  contract  itself,  if  he  had  been 
authorized  to  make  it,  would  have  furnished  no  ground 
of  action.  That  the  agent  who  makes  a  contract  for  an 
undisclosed  principal  is  personally  bound  by  it,  although 
the  party  dealing  with  him  may  know  the  general  fact 
that  he  is  acting  as  agent,  is  well  settled;  nor  does  the 
fact  that  the  agent  is  an  auctioneer,  and  that  the  contract 
arises  upon  a  sale  by  him  as  such,  withdraw  it  from  the 
operation  of  the  rule." 

Where  an  agent  signs  a  contract  of  sale  which  the 
owner  repudiates,  it  does  not  deprive  the  agent  of  com- 
pensation for  services  if  he  produced  a  purchaser  ready, 
willing  and  able.30 

»  Hall  v.  Landerdale,  46  N.  T.  70  (1871). 

»  See  §§  273,  274  supra. 

*»  Citing  Dung  v.   Parker,   52  N.  Y.  494. 

*>  Monroe  v.  Snow,  131  111.  135  (1891).     And  see  §§  117-119  supra. 


LIABILITY   OF   BROKER   TO    THIRD   PARTIES.  287 

§  277.    Liability  of  Agent  Acting  for  Undisclosed  Prin- 
cipal. 

"  The  general  rule  is  that  one  who  acts  as  agent  for 
another,  in  order  to  release  himself  from  liability,  should 
disclose  his  principal,  because  otherwise  it  would  be  pre- 
sumed that  he  intended  to  bind  himself  personally.  In 
other  words,  it  is  not  the  duty  of  one  dealing  with  an 
agent  to  find  out  whether  he  is  acting  in  the  transaction 
in  that  capacity,  or  as  principal ; 31  but  it  is  the  duty  of 
the  agent,  if  he  desires  to  relieve  himself  from  personal 
liability,  to  disclose  the  name  of  his  principal  in  the  trans- 
action."32 "  One  who  contracts  as  principal  cannot  es- 
cape liability,  certainly  not  after  a  suit  is  brought,  by 
proving  that  he  was  acting  as  an  agent."33 

"  It  is  a  well  recognized  rule  of  law  that  where  an 
agent  conceals  the  fact  of  his  agency  and  enters  into  a 
contract  in  his  own  name,  he  may  be  treated  as  the  prin- 
cipal by  the  party  with  whom  he  deals,  and  may  be  held 
liable  on  the  contract  to  the  same  extent  as  if  he  were  in 
fact  the  principal  in  interest. " 34  '  *  It  is  well  settled  that 
when  the  agency  is  disclosed,  and  the  contract  relates  to 
the  matter  of  the  agency,  and  is  within  the  authority 
conferred,  the  agent  will  not  be  personally  bound,  un- 
less, upon  clear  and  explicit  evidence  of  an  intention  to 
substitute  or  to  superadd  his  personal  liability  for  or  to 
that  of  the  principal. ' ' 35 

' '  In  case  of  written  agreements  executed  by  an  agent, 
the  agent  is,  in  general,  personally  bound,  if  the  instru- 
ment can  have  no  legal  operation  against  the  principal. 
But  in  construing  oral  agreements  made  by  an  agent, 

*i  This  statement  should  not  be  confused  with  the  principle  that  one  who  deals  with 
an  agent,  knowing  him  to  be  snch,  Is  bound  to  know  the  limitations  placed  upon  his 
authority.  See  §  28  supra. 

saCrosett  v.  Carleton.  48  N.  Y.  Suppl.  309  (1897).     See  also  §  263  supra. 

"McGovern  v.  Bennett.  146  Mich.  562  (1906),  (citing  White  Y.  Boyce,  21  Fed. 
228;  McKnown  v.  Oettys,  25  Ky.  Law  Rep.  2070). 

»«  Whitney  v.  Woo'dmansee.  15  Idaho  739  (1909).  (citing  2  Clark  &  Skyles  on  Air., 
§  5G8;  Story  on  Ag..  §§  266,  267;  Murphy  v.  Helmrich,  66  Cal.  69;  4  Pac.  958;  Ye  Seng 
Co.  v.  Corbitt,  9  Fed.  423;  7  Saw.  368). 

"Whiting  v.  Saunders,  23  Misc.  332  (N.  Y.  1898).  (citing  Hall  T.  Lauderdale.  46 
N.  Y.  74).  * 


288  PRINCIPAL   AND    AGENT. 

courts  give  effect  to  the  real  intention  of  the  parties,  un- 
embarrassed by  technical  rules  of  construction;  and 
when  the  act  is  within  the  authority,  the  presumption  is 
that  the  agent  intends  to  bind  the  principal  and  not  him- 
self." 36 

In  the  editorial  note  in  Wheeler  v.  McGuire,  2  L.  R.  A. 
811  (Ala.  1888),  it  is  said:  "An  agent  may  become  liable 
on  contracts  made  by  him  in  that  capacity:  first,  where 
the  principal  is  not  known;  secondly,  where  there  is  no 
responsible  principal  (except  in  the  case  of  public 
agents) ;  thirdly,  where  he  becomes  liable  by  an  under- 
taking of  his  own."  This  note  also  sets  forth  the  follow- 
ing propositions,  citing  authorities  therefor:  "Where  an 
agent  in  his  dealings  with  third  parties  does  not  disclose 
his  principal  he  will  be  personally  liable  on  the  contract. 

"The  agent  will  be  liable  on  a  contract  entered  into 
for  an  undisclosed  principal,  even  if  it  is  well  known  to 
the  third  party  that  he  acts  only  as  an  agent. 

"When  a  party  deals  with  the  agent,  without  any  dis- 
closure of  his  agency,  he  may  elect  to  treat  the  after  dis- 
covered principal  as  the  person  with  whom  he  contracted. 

"He  has  a  right,  within  a  reasonable  time,  to  elect  to 
proceed  against  the  principal,  unless  in  the  meantime, 
with  full  knowledge  as  to  who  was  the  principal,  and 
with  the  power  of  choosing  between  him  and  the  agent, 
he  had  elected  to  treat  the  agent  alone  as  his  debtor. 

"After  a  third  party  has  elected  whom  to  sue,  and 
has  sued  either  the  agent  or  the  principal  to  judgment, 
he  cannot  after  that  sue  the  other,  whether  the  suit  has 
been  successful  or  not. 

"If,  at  the  tune  of  the  sale,  the  seller  knows,  not  only 
that  the  person  who  is  nominally  dealing  with  him  is  not 
principal,  but  agent,  and  also  knows  who  the  principal 
really  is,  and  notwithstanding  all  that  knowledge, 
chooses  to  make  the  agent  his  debtor,  dealing  with  him 

MHall  v.  Laudcrdale,  46  N.  Y.  70  (1871). 


LIABILITY   OF   BROKER   TO   THIRD   PARTIES.  289 

alone,  the  seller  cannot  charge  the  principal,  having  once 
elected  to  sue  the  agent." 

Mr.  Clark  lays  down  these  propositions:  Where  an 
agent  contracts  as  agent  for  a  principal  who  is  named, 
the  agent  cannot  sue  in  his  own  name  on  the  contract, 
except  where  he  is  the  real  principal,  though  named  as 
agent,  or  where  he  has  a  special  interest  in  the  subject 
matter  of  the  contract.  The  agent  cannot  be  sued  on  the 
contract,  except  where  the  contract  is  under  seal,  and  he 
has  made  himself  a  party  to  it,  or,  in  some  jurisdictions, 
where  he  contracted  for  a  foreign  principal,  or  where  he 
has  exceeded  his  authority  or  has  contracted  without  au- 
thority, or  where  the  contract  was  really  made  with  him 
personally,  though  he  is  described  as  agent.37 

§  278.    Unlawful  Intrusion  on  Real  Property. 

No  attempt  is  made  in  the  present  volume  to  present 
the  criminal  statutes  of  the  several  states  relating  to  of- 
fenses against  real  property.  A  provision  of  the  New 
York  statutes  follows,  in  order  to  illustrate  how  the  crimi- 
nal laws  prohibiting  trepass  might  possibly  affect  the 
broker.  As  will  be  noted,  going  upon  property  of  an- 
other and  affixing  thereon  ''to  let"  or  "for  sale"  signs 
without  being  authorized  may  subject  a  real  estate  agent 
to  criminal  liability.  Since  we  are  not  aware  of  any  re- 
ported opinion  judicially  declaring  that  the  acts  above 
mentioned  are  within  the  provisions  given,  we  merely 
quote  the  provisions  without  comment. 

"A  person,  who  intrudes  upon  any  lot  or  piece  of  land 
within  the  bounds  of  a  city  or  village,  without  authority 
from  the  owner  thereof  '  *  is  guilty  of  a  misde- 
meanor." 38 

' '  A  person  who  places  upon  or  affixes  to,  or  causes  or 

"  Clark  on  Contracts,   pp.   731,  732. 
18  N.  Y.  Penal  Law,  §  2036. 


290  PRINCIPAL   AND   AGENT. 

procures  to  be  placed  upon  or  affixed  to,  real  property  not 
his  own,  or  a  rock,  tree,  wall,  fence,  or  other  structure 
thereupon,  without  the  consent  of  the  owner,  any  words, 
characters  or  device,  as  a  notice  of,  or  reference  to,  any 
article,  business,  exhibition,  profession,  matter  or  event, 
is  punishable  by  imprisonment  for  not  more  than  six 
months,  or  by  a  fine  of  not  more  than  two  hundred  and 
fifty  dollars,  or  by  both.  The  placing  or  affixing  of  any 
words,  characters,  device  or  notice,  of  any  article,  busi- 
ness or  other  thing,  to  or  upon  any  property  or  place 
specified  in  this  section,  is  presumptive  evidence  that  the 
proprietor,  vendor  or  exhibitor  thereof  caused  or  pro- 
cured the  same  to  be  so  placed  or  affixed." 39 

«•  N.  Y.  Penal  Law,  §  121. 


PART    IV.— FRAUD. 


CHAPTER  XXIX. 

WHAT  CONSTITUTES  FRAUD.    ACTS  NOT  USU- 
ALLY   CONSIDERED    FRAUDULENT. 

§  279.    General  Statement. 

Fraud  is  a  false  representation  or  non-disclosure  of 
a  material  fact,  made  with  intent  to  deceive  and  operat- 
ing to  deceive  another  party  to  his  injury.  Fraud  may 
be  committed  not  only  by  word  of  mouth,  but  by  means 
of  writings,  pictures,  maps,  and  the  like.  (§§  280,  281.) 

Generally,  mere  silence  is  not  fraud ;  neither  can  fraud 
be  based  upon  mere  expressions  of  hope,  expectation  and 
the  like,  nor  upon  promises  solely,  nor  as  a  general  rule 
upon  naked  assertions  of  value.  (§§  282-291.) 

§  280.    What  is  Fraud? 

Fraud  has  been  aptly  defined  to  be  "a  false  represen- 
tation of  a  material  fact,  or  non-disclosure  of  a  material 
fact  under  such  circumstances  that  it  amounts  to  a  false 
representation  made  with  knowledge  of  its  falsity,  or  in 
reckless  disregard  of  whether  it  is  true  or  false,  or  as  of 
personal  knowledge,  with  the  intention  that  it  shall  be 
acted  upon  by  the  other  party,  and  which  is  acted  upon 
by  him  to  his  injury. ' ' l  Picture  cards,  maps,  signs  and 
photographs  may  be  the  instruments  of  fraudulent  mis- 

i  Clark  on  Contracts,  324;  Maupin   on  Marketable  Titles   (2d  Ed.).  Cb.   XI. 

291 


292  FBAUD. 

representations.  As  for  instance,  where  they  tend  to 
mislead  and  produce  a  false  impression  as  to  the  con- 
tiguity of  the  property  to  other  highly  developed  and  im- 
proved property.2 

Fraud,  to  vitiate  a  contract,  must  be  material  and 
must  relate  distinctly  and  directly  to  the  contract,  and 
must  affect  its  very  essence  and  substance.3  Misrepre- 
sentation with  intent  to  deceive  is  the  legal  equivalent 
of  actual  fraud.4  "Where  a  party  to  a  contract  in  mak- 
ing a  false  representation  is  honestly  mistaken,  there  is 
no  ingredient  of  fraud  in  the  case.  This  rule,  however, 
does  not  permit  him  to  make  false  statements  recklessly 
or  without  some  foundation  for  belief  in  them.  Before 
one  positively  affirms  the  existence  of  a  fact,  he  must  pro- 
ceed upon  reasonable  inquiry,  and  have  some  apparently 
good  ground  for  his  affirmation."5  A  mistake  or  inno- 
cent misrepresentation  is  enough  for  rescission  of  the 
contract.6 

§  281.    Broker's  Frauds. 

To  attempt  to  enter  in  detail  into  the  forms  which 
fraud  and  misrepresentation  may  take  with  respect  to 
real  estate  transactions,  would  be  an  impossible  task.  It 
would  require  an  exceedingly  lively  imagination  to 
speculate  as  to  the  various  methods  by  which  fraud 
might  be  perpetrated.  Yet  it  may  be  suggested  that 
there  are  certain  formulae  in  vogue  in  real  estate  trans- 
actions which  are  not  infrequently  resorted  to  and  which 
are  or  may  be  fraudulent. 

2  Scarsdale  Pub.  Co.  v.  Carter,  63  Misc.  277   (N.  T.  1909). 

« Smith  v.  Countryman,  30  N.  Y.  670  (1864);  Press  v.  Hair,  133  111.  App.  534 
(1907)  ;  Meeks  v.  Garner,  11  L.  R.  A.  196  (Ala.  1890)  ;  Dawe  v.  Morris.  4  L.  R.  A.  158 
(Mass.  1889). 

*Forsterv.  Wilhusen,  14  Misc.  520  (N.  Y.  1895),  (citing  Kiev  v.  Healy,  127  N.  Y. 
555,  561  (1891). 

8  Hammond  v.  Pennock.  61  N.  Y.  150.  151  (1S74)  :  Erie  City  Iron  Works  v.  Barber, 
106  Pa.  St.  138  (1884);  Cabot  v.  Christie.  42  Vt.  121  (IM'.iti. 

8  Forster  v.  Wilhusen,  14  Misc.  520  (N.  Y.  1895),  (citing  Kountze  v.  Kennedy.  147 
N.  Y.  124  (1895)  ;  Crowe  v.  Lewin,  95  N.  Y.  423  (1884)  ).  And  see  Maupin  on  Market- 
able Titles  (2d  Ed,),  §  105. 


ACTS   NOT   USUALLY   CONSIDERED   FRAUDULENT.          293 

Those  experienced  in  real  estate  matters,  and  very 
many  with  but  a  single  experience,  will  find  no  difficulty 
in  subscribing  to  the  general  statement  that  the  methods 
sometimes  invoked  to  bring  about  a  sale,  are  not  all  that 
might  be  desired.  Many  vendors— not  to  mention  real 
estate  brokers— insist  that  the  truth  should  always  be 
told,  but  it  must  be  admitted  that  all  the  truth  is  not  al- 
ways told. 

§  282.    Silence  and  "Concealment." 

The  general  rule  is  that  mere  silence  is  no  fraud,  ex- 
cept where  the  silence  amounts  to  an  affirmation  that  a 
state  of  things  exists  which  does  not.7  That  which  is 
ethical  is  not  always  the  law,  nor  does  the  law  always  cor- 
respond with  the  ethical.  If  a  man  is  about  to  sell  his 
property,  what  information  ought  he  to  give  the  proposed 
buyer,  and  what  information  may  he  properly  withhold! 
This  presents  a  question  of  ethics  on  the  one  hand  and  a 
question  of  law  on  the  other.  It  is  not  a  novel  question. 
Even  Cicero,  who  practised  law  1900  years  ago,  seems 
to  have  had  occasion  to  go  into  the  question,  and  we  may 
assume  from  what  he  says  that  even  in  those  days  some 
of  the  real  estate  agents  "knew  the  business."  He  says 
in  the  third  book  of  the  De  Officiis: 

"A  good  man  sells  a  house  on  account  of  some  de- 
fects, of  which  he  himself  is  aware  and  others  ignorant. 
Perhaps  it  is  unhealthy,  and  is  supposed  to  be  healthy,— 
it  is  not  generally  known  that  snakes  make  their  appear- 
ance in  all  the  bedrooms,— it  is  built  of  bad  materials, 
and  is  in  a  ruinous  condition;  but  nobody  knows  this  ex- 
cept the  owner.  I  ask,  if  the  seller  should  have  failed 
to  tell  these  things  to  the  buyer,  and  should  thus  have 
sold  his  house  for  a  higher  price  than  he  could  reasonably 
have  expected,  whether  he  would  have  acted  unjustly  or 

TCooley  on  Torts  (2d  Ed.),  pp.  557-565. 


294  FRAUD. 

unfairly?  'Yes,  he  would,'  says  Antipater;  'for  what  is 
meant  by  not  putting  into  the  right  way  one  who  has  lost 
his  way  (which  at  Athens  exposed  a  man  to  public  exe- 
cration), if  it  does  not  include  a  case  in  which  a  buyer 
is  permitted  to  rush  blindly  on  and  through  his  mistake 
to  fall  into  a  heavy  loss  by  fraudulent  means  ?  It  is  even 
worse  than  not  showing  the  right  way;  it  is  knowingly 
leading  another  into  the  wrong  way.'  Diogenes,  on  the 
other  hand  says:  'Did  he  who  did  not  even  advise  you  to 
buy,  force  you  to  buy?  He  advertised  for  sale  what  he 
did  not  like;  you  bought  what  you  did  like.  Certainly, 
if  those  who  advertise  a  good  and  well-built  house  are 
not  regarded  as  swindlers,  even  though  it  is  neither  good 
nor  properly  built,  much  less  should  those  be  so  regarded 
who  have  said  nothing  in  praise  of  their  house.  For  in 
a  case  in  which  the  buyer  can  exercise  his  own  judgment, 
what  fraud  can  there  be  on  the  part  of  the  seller?  And 
if  all  that  is  said  is  not  to  be  guaranteed,  do  you  think 
that  what  is  not  said  ought  to  be  guaranteed?  What 
could  be  more  foolish  than  for  the  seller  to  tell  the  defects 
of  the  articles  that  he  is  selling?  Nay,  what  so  absurd 
as  for  an  auctioneer,  by  the  owner's  direction,  to  pro- 
claim, * '  I  am  selling  an  unhealthf ul  house  ? " '  Thus,  then, 
in  certain  doubtful  cases  the  right  is  defended  on  the  one 
side;  on  the  other,  expediency  is  urged  on  the  ground 
that  it  is  not  only  right  to  do  what  seems  expedient,  but 
even  wrong  not  to  do  it.  This  is  the  discrepancy  which 
seems  often  to  exist  between  the  expedient  and  the  right. 
But  I  must  state  my  decision  in  these  cases;  for  I  intro- 
duced them,  not  to  raise  the  inquiry  concerning  them, 
but  to  give  their  solution.  It  seems  to  me,  then,  that 
neither  that  Rhodian  corn-merchant  nor  this  seller  of  the 
house  ought  to  have  practiced  concealment  with  the  buy- 
ers. In  truth,  reticence  with  regard  to  any  matter  what- 
ever does  not  constitute  concealment;  but  concealment 
consists  in  willingly  hiding  from  others  for  your  own  ad- 


ACTS   NOT   USUALLY   CONSIDERED   FRAUDULENT.          295 

vantage  something  that  you  know.  Who  does  not  see 
what  sort  of  an  act  such  concealment  is,  and  what  sort  of 
a  man  he  must  be  who  practices  it?  Certainly  this  is  not 
the  conduct  of  an  open,  frank,  honest,  good  man,  but 
rather  of  a  wily,  dark,  crafty,  deceitful,  ill-meaning,  cun- 
ning man,  an  old  rogue,  a  swindler.  Is  it  not  inexpedient 
to  become  liable  to  these  so  numerous  and  to  many  more 
bad  names?  "8 

If  the  fear  of  having  the  names  in  Cicero's  category 
applied  to  them,  deterred  many  of  the  Romans  from  the 
conduct  discussed,  how  different  they  must  have  been 
from  some  of  the  brokers  we  meet  in  our  day! 

Cicero,  though  he  handles  the  subject  so  pleasantly, 
does  not  after  all  give  a  decided  opinion,  for  does  he  not 
in  effect  argue  that  concealment  is  wrong?  But  what 
concealment  is,  he  leaves  for  others  to  determine.  The 
cases  in  our  own  courts  are,  as  a  whole,  hardly  more  ex- 
plicit. In  People's  Bank  v.  Bogart,  81  N.  Y.  107  (1880), 
it  is  said  that  "the  law  requires  disclosure  to  be  made 
only  when  there  is  a  duty  to  make  it,  and  this  duty  is 
not  raised  by  the  mere  circumstance  that  the  undis- 
closed fact  is  material,  and  is  known  to  the  one  party  and 
not  to  the  other,  or  by  the  additional  circumstance  that 
the  party  to  whom  it  is  known,  knows  that  the  other 
party  is  acting  in  ignorance  of  it."  The  court  quotes 
Story  on  Contracts  to  the  effect  that  "the  general  rule 
both  of  law  and  equity,  in  respect  to  concealments,  is  that 
mere  silence  with  regard  to  a  material  fact  which  there 
is  no  legal  obligation  to  divulge  will  not  avoid  a  contract, 
although  it  operates  to  the  injury  of  the  party  from 
whom  it  is  concealed." 

§  283.    Requirements  as  to  Disclosure. 

"The  rule  is  well  established  that  where  persons  are 

8  Wilkinson's  Latin  Classics,   Vol.   2,   pp.   262,   263. 


296  FBATJD. 

dealing  with  each  other  upon  equal  terms,  and  no  confi- 
dential relation  exists  between  them,  neither  is  bound  to 
disclose  superior  information  he  may  have  respecting  the 
transaction,  and,  in  the  absence  of  fraud  or  deception  to 
induce  the  contract,  the  court  can  afford  no  relief. ' ' 9 

"The  following  propositions  may  be  stated  as  em- 
bodying the  principal  features  of  the  decisions  as  to  what 
acts  or  conduct  of  the  vendor  amount  to  fraud  in  respect 
to  the  title  which  he  undertakes  to  convey:  (1)  The  ven- 
dor is  guilty  of  fraud  if  he  conceals  a  fact  material  to  the 
validity  of  the  title,  lying  peculiarly  within  his  own 
knowledge,  and  which  it  is  his  duty  to  disclose.  It  is  as 
much  a  fraud  to  suppress  the  truth  as  it  is  to  utter  a 
falsehood.  The  question,  what  facts  the  seller  must  dis- 
close, is  capable  of  much  refinement.  Obviously  it  can- 
not be  determined  by  any  precise  rule.  In  every  case 
that  arises  the  question  is  one  of  fact  to  be  solved  by 
all  the  circumstances  which  surround  the  transaction, 
among  which,  perhaps,  the  most  important  are  the  rela- 
tions of  trust  and  confidence  which  the  parties  bear  to 
each  other,  and  the  inequalities  in  their  respective  busi- 
ness capacities,  or  opportunities  for  information  respect- 
ing the  title."10 

§  284.    Fraudulent  Concealment  by  the  Purchaser. 

Cases  involving  concealment  on  the  part  of  the  pur- 
chaser, though  less  frequently  before  the  courts  than 
those  in  which  the  vendor's  concealment  is  complained 
of,  present  interesting  and  sometimes  difficult  questions. 
"It  has  long  been  settled  in  common  law  jurisdictions 
that,  in  general,  the  mere  failure  of  a  buyer  to  disclose 
something  extrinsic  or  intrinsic  to  the  thing  bought, 
known  to  him  and  not  known  to  the  seller,  is  not  in  legal 

•Jones  T.  Stewart,  87  N.  W.  13  (1901). 

"Maupin  on  Marketable  Titles  (2d  Ed.),  pp.  238-240. 


ACTS   NOT   USUALLY   CONSIDERED   FRAUDULENT.  297 

sense  fraud."  n  But  while  mere  reticence  on  the  part  of 
the  purchaser  does  not  amount  to  a  fraud,  very  little  is 
sufficient  to  defeat  the  application  of  that  principle.  A 
single  word  which  tends  to  mislead  the  vendor,  or  even  a 
nod,  or  a  wink,  or  a  shake  of  the  head,  or  a  smile  from  the 
purchaser,  may  be  enough.12 

In  Crompton  v.  Beedle,  75  Atl.  333  (Vt.  1910),  the 
owner  of  land  lived  some  distance  therefrom.  The  de- 
fendant, being  aware  of  a  valuable  but  undeveloped 
quarry  on  the  land,  the  existence  of  which  the  owner  was 
ignorant  of,  obtained  an  option  to  purchase,  and  subse- 
quently a  deed  of  the  land,  upon  the  representation  that 
it  was  of  little  value  and  that  the  only  reason  he  desired 
the  land  was  because  it  adjoined  some  land  belonging  to 
him,  and  that  the  only  way  of  access  thereto  was  over  his 
land,  and  that  the  passing  to  and  fro  for  such  access  an- 
noyed him  and  his  family.  It  was  held  that  the  vendor, 
living  at  a  distance,  being  thrown  off  her  guard  by  reli- 
ance on  the  representations  and  therefore  not  inquiring 
as  to  the  real  value  of  the  land,  might  rescind  on  discov- 
ering the  real  situation.13  "An  action  will  lie  for  fraudu- 
lent representations  made  by  the  prospective  purchaser 
of  land  as  to  its  value  and  condition;  the  land  being  at  a 
distance  from  the  place  of  purchase,  and  the  vendor  be- 
ing ignorant  as  to  its  condition  and  value,  and  relying 
upon  the  truthfulness  of  such  representations." 14 

It  seems  that  this  question  would  not  be  affected  by 
the  fact  that  no  confidential  relations  existed  between  the 
parties.15  "Unfairness  and  fraud  may  be  collected  from 

n  Crompton  v.  Beedle,  75  Atl.  333  (Vt.  1910),  (citing  For  T.  Mackreth.  2  Bro. 
C.  C.  420 ;  Harris  v.  Tyson,  24  Pa.  347  ;  64  Am.  Dec.  661 ;  Smith  v.  Beatty,  37  N.  C. 
456;  40  Am.  Dec.  435;  Laldlaw  v.  Organ,  2  Wheat.  178;  4  L.  Ed.  214). 

13  Crompton  v.  Beedle,  supra. 

M  This  case  also  refers  to  the  following1  authorities :  Paddock  v.  Strobrldge,  29  Vt. 
470;  Maynard  v.  Maynard.  49  Vt.  297;  Etting  v.  Bk.  of  U.  S.,  11  Wheat.  59 ;  6  L.  Ed. 
419;  Turner  T.  Harvey,  Jacob  169,  178  (Eng.)  ;  Walters  v.  Morgan,  3  De  G.  F.  &  J. 
718;  Livingston  v.  Peru  Iron  Co..  2  Paige  (N.  Y.)  390;  Haygarth  v.  Wearing,  L.  B.  12 
Eq.  320;  Mountain  v.  Day,  91  Minn.  249;  97  N.  W.  883, 

"  Syllabus  by  the  court  in  Mountain  v.  Day,  91  Minn.  249 ;  97  N.  W.  883,  quoted  In 
Crompton  v.  Beedle,  75  Atl.  334  (Vt.  1910). 

10  Crompton  v.  Beedle,  supra. 


298  FRAtTD. 

a  variety  of  circumstances,  and  it  is  ordinarily  enough. 
to  establish  fraud  that  a  vendee  has  actively  attempted 
to  ensnare,  and  has  in  fact  ensnared,  the  vendor  into  the 
making  of  an  unconscionable  contract.  Where  conceal- 
ment of  an  essential  thing  is  effected  by  an  industrious 
course  of  misleading  and  deceptive  talk  or  conduct,  there 
is  fraud  against  which  equity  will  relieve.  The  law  dis- 
tinguishes between  passive  concealment  and  active  con- 
cealment. Where  one  has  full  information,  and  repre- 
sents that  he  has,  if  he  discloses  a  part  of  his  information 
only,  and  by  words  or  conduct  leads  the  one  with  whom 
he  contracts  to  believe  that  he  has  made  a  full  disclosure, 
and  does  this  with  intent  to  deceive  and  overreach  and 
to  prevent  investigation,  he  is  guilty  of  fraud  against 
which  equity  will  relieve,  if  his  words  and  conduct  in 
consequence  of  reliance  upon  them  bring  about  the  result 
which  he  desires." 18 

§  285.    Promises,  Hopes,  etc. 

"It  is  a  familiar  rule,  where  representations  consist 
in  mere  expressions  of  hope,  expectations  and  the  like, 
that  the  party  to  whom  they  are  made  is  not  legally  jus- 
tified in  relying  upon  them  and  assuming  them  to  be  true. 
The  representation  of  what  one  expects,  or  hopes,  as 
about  to  take  place,  in  order  to  induce  action  on  the  part 
of  the  person  to  whom  made,  may  be  honest,  or  may  be 
fraudulent.  If  the  former,  then  no  action  will  lie  upon 
the  ground  of  fraud,  if  the  expectation  is  not  realized. 
If  the  representation  is  made  fraudulently  and  with  the 
intention  to  deceive,  then  the  evidence  must  exhibit  it  in 
that  character.  For  the  presumption  will  be,  in  the  ab- 
sence of  such  evidence,  that  the  person  making  the  repre- 
sentation did  so  honestly,  however  extravagant  in  his 
hopes."17 

"Crompton  v.  Beedle,  75  Atl.  334,  335  (Vt.  1910). 

"Kley  vvHealy,   149  N.   Y.   351,  352   (1891);  Chambers  v.   Mitchell,    123  111.   App, 


ACTS   NOT    USUALLY    CONSIDERED   FRAUDULENT.  299 

A  representation  that  certain  title  companies  would 
lend  a  certain  amount  on  mortgage  upon  the  property  is 
promissory  in  its  nature.  A  person  has  no  right  to  rely 
thereon.  So  it  is  held  in  Kreshover  v.  Berger,  62  Misc. 
613  (N.  Y.  1909).  But  in  the  same  case,  on  appeal,18  it 
was  held  that  a  statement  that  a  title  insurance  company 
had  accepted  a  certain  loan  on  the  premises,  when  in  fact 
it  had  declined  "to  pass"  a  loan  by  reason  of  defects  in 
the  construction  of  a  wall,  is  a  material  misrepresenta- 
tion. Where  the  representations  were  that  the  enter- 
prise in  which  the  plaintiff  was  invited  to  put  his  capital 
" would  yield  large  profits"  or  that  "it  was  a  good  pay- 
ing business,"  they  were  held  promissory  and  matter  of 
opinion,  having  respect  to  the  development  of  the 
future.19 

§  286.    Promises  and  False  Representations. 

But  even  if  reliance  is  placed  upon  the  mere  promises 
of  the  vendor  as  well  as  upon  his  false  representations, 
still  a  cause  of  action  for  fraud  may  be  maintained  pro- 
vided the  representations  have  a  material  effect  in  accom- 
plishing the  deception.  It  is  not  necessary  that  they 
should  be  the  sole  inducing  cause.20 

And  while  fraud  cannot  be  founded  solely  upon  a 
promise  not  performed,  even  if  the  promisor  never  in- 
tended to  fulfill  the  same,  yet  a  statement  of  a  present 
existing  intent  may  be  made  the  basis  of  fraud.  Thus  in 
Adams  v.  Gillig,  131  App.  Div.  494  (N.  Y.  1909),  a 
grantee  of  land  situated  in  the  residential  part  of  a  city, 
while  negotiating  the  contract  of  sale,  and  having  a 
present  and  existing  intention  to  erect  an  automobile 
garage,  specifically  represented  to  the  grantor  that  he 
intended  to  use  the  property  for  dwelling  houses  and  for 

>8  Kreshover  v.   Burger.    135  App.   Dlv.  27   (N.   Y.   1909). 
"•Sparman  v.  Kelm.  83  N.  Y.  245   (1880). 
a>Kley  v.  Healy,  127  N.  Y.  561   (1891). 


300  FRAUD. 

no  other  purpose.    Held  there  was  a  fraudulent  misrep- 
resentation as  to  an  existing  fact.21 


§  287.    Opinions;  Expressions  of  Value. 

We  have  seen  that  generally  there  can  be  no  fraud 
predicated  upon  expressions  of  hope,  or  expectation,  and 
so  there  can  generally  be  no  fraud  based  upon  expres- 
sions of  value,  for  an  expression  of  value  is  nothing  more 
than  an  opinion.22  In  one  man's  opinion  the  value  of  a 
piece  of  land  may  be  far  different  than  in  another's. 


§  288.    Assertion  of  Value,  Though  False,  Not  Ordi- 
narily Fraudulent. 

"Assertions  must  be  considered,"  says  the  court  in 
Conlan  v.  Eoemer,  52  N.  J.  L.  55  (1889),  "  in  the  light  of 
the  subject-matter  in  respect  to  which  they  are  made. 
The  general  doctrine  is  that  a  misrepresentation  uncon- 
nected with  any  misrepresentation  of  kind,  quality  or 
quantity,  by  the  vendor,  though  false,  affords  no  cause 
of  action.  Every  person  reposes  at  his  peril  in  the  opinion 
of  others  when  he  has  equal  opportunity  to  form  his  own 
judgment.  Mere  expressions  of  matters  of  opinion,  how- 
ever strongly  or  positively  made,  though  they  are  false, 
do  not  constitute  actionable  fraud.  Statements  of  mere 
matters  of  opinion  or  judgment,  although  known  to  be 
false,  do  not  constitute  a  fraud  in  the  absence  of  relations 
of  trust  and  confidence.23  It  is  not  fraud  to  aver  strongly 
that  the  purchaser  will  make  a  good  and  profitable  pur- 
chase by  accepting  the  vendor's  offer.  It  may  be  other- 
wise if  in  connection  with  the  expression  of  opinion  there 

»  Cf .   Brown  v.   Honlss,   74  N.   J.   L.   508    (1906). 

22  Page  v.  Parker.  43  N.  H.  368  (1861)  :  Hetland  v.  Bilstad,  118  N.  W.  423  (Iowa 
1908)  ;  State  Bank  v.  Brown,  119  N.  W.  83  (Iowa  1909)  ;  Bosley  v.  Monahan,  112  N.  W. 
1102  (Iowa  1907)  ;  Mayo  v.  Wahlgreen,  50  Pac.  43  (Colo.  1897)  ;  Hecht  v.  Metzler,  48 
Pac.  40  (Utah  1897)  ;  note  In  Denning  v.  Darling,  2  L.  R.  A.  743  (Mass.  1889). 

»  Citing  Wise  v.  Fuller,  2  Stew.  Eq.  257. 


ACTS    NOT    USUALLY    CONSIDERED   FRAUDULENT.  301 

were  false  assertions  of  fact  calculated,  if  true,  to  give  a 
basis  for  the  opinion."24 

"  The  rule  is  well  settled  that  a  naked  assertion  by 
a  vendor  of  the  value  of  property  offered  for  sale,  even 
although  untrue  of  itself,  and  known  to  be  such  by  him, 
unless  there  is  a  want  of  knowledge  by  the  vendee,  and 
the  sale  is  made  in  entire  reliance  upon  the  representa- 
tions made,  or  unless  some  artifice  is  employed  to  pre- 
vent inquiry  or  the  obtaining  of  knowledge  by  the  vendee, 
will  not  render  the  vendor  responsible  to  the  vendee  for 
damages  sustained  by  him. ' ' 25 

§  289.    Opinions  Amounting  to  Affirmations  of  Fact. 

But  opinions  may  sometimes  amount  to  representa- 
tions of  fact.  In  People  v.  Peckens,  153  N.  Y.  591  (1897), 
it  was  said :  * '  As  a  general  rule,  the  mere  expression  of 
an  opinion,  which  is  understood  to  be  only  an  opinion, 
does  not  render  a  person  expressing  it  liable  for 
fraud."26  "  But,"  continues  the  court,  "  where  the 
statements  are  as  to  value  or  quality,  and  are  made  by  a 
person  knowing  them  to  be  untrue,  with  an  intent  to  de- 
ceive and  mislead  the  one  to  whom  they  are  made,  and 
he  is  thus  induced  to  forbear  making  inquiries  which  he 
otherwise  would,  they  may  amount  to  an  affirmation  of 
fact  rendering  him  liable  therefor.  In  such  a  case, 
whether  a  representation  is  an  expression  of  opinion  or 
an  affirmation  of  a  fact  is  a  question  for  the  jury.  The 
rule  that  no  one  is  liable  for  an  expression  of  an  opinion 
is  applicable  only  when  the  opinion  stands  by  itself  as  a 
distinct  thing.  If  it  is  given  in  bad  faith,  with  knowl- 
edge of  its  untruthfulness  to  defraud  others,  the  person 
making  it  is  liable,  especially  when  it  is  as  to  a  fact  affect- 

•*  Citing  McAleer  v.  Horsey,  35  Md.  439. 

as  Chrysler  v.  Canaday,  90  N.  Y.  279  (1882);  Sels  v.  Plalsantln,  52  App.  Dlv.  206 
(N.  Y.  1900). 

29  See  also  Press  v.  Hair,  133  111.  App.  534  (1907),  (citing  Buschman  v.  Codd,  52 
Md.  202;  Robertson  v.  Parks,  76  Md.  118;  Wade  v.  Rlngo,  122  Mo.  322).  See  also 
note  to  Denning  v.  Darling,  2  L.  R.  A.  743  (Mass.  1889). 


302  FRAUD. 

ing  quality  or  value  and  is  peculiarly  within  the  knowl- 
edge of  the  person  making  it. ' ' 27. 

§  290.    Assertions  and  Opinions  Fraudulent  in  Intent. 

In  Hetland  v.  Bilstad,  118  N.  W.  423,  424  (Iowa 
1908),  it  was  said:  "  Parties  in  negotiating  deals  have 
the  right  to  exalt  the  value  or  quality  of  their  own  prop- 
erty to  the  highest  point  credulity  will  bear,  provided 
their  efforts  in  this  line  go  no  further  than  puffing  or 
praise  which  the  vendor  may  properly  indulge  in;  but 
statements  of  value  or  quality  may  be  made  with  the 
purpose  of  having  them  accepted  as  of  fact,  and,  if  this 
is  done,  and  so  relied  on,  they  are  to  be  treated  as  the 
parties  designed  they  should  be,  namely,  representa- 
tions of  fact.28  In  that  case  the  court  said :  *  The  evidence 
in  behalf  of  plaintiff  clearly  indicated  the  intention  of 
Walsh  that  his  assertion  of  the  value  of  the  land  should 
be  acted  upon  as  true,  and  not  merely  as  his  estimate, 
and,  if  so,  and  it  was  knowingly  false  and  induced  an 
exchange  by  plaintiff  to  her  damage,  it  was  actionable.' 
This  is  fully  sustained  by  the  authorities.29  The  rule  is 
forcibly  stated  in  Murray  v.  Tolman  (162  111.  417;  41 
N.  E.  748) :  *  Where  the  vendee  is  wholly  ignorant  of 
the  value  of  the  property,  and  the  vendor  knows  this, 
and  also  knows  that  the  vendee  is  relying  on  his  (vend- 
or's) representations  as  to  the  value,  and  such  repre- 
sentation is  not  a  mere  expression  of  opinion,  but  is 
made  as  a  statement  of  fact,  which  statement  the  vendor 
knows  to  be  untrue,  such  a  statement  is  a  representa- 
tion by  which  the  vendor  is  bound.' 

"Citing  Watson  Y.  People.  87  N.  Y.  561;  Simar  v.  Canaday,  53  N.  Y.  298; 
Hlckey  v.  Morrell,  102  N.  Y.  454,  463;  Schumacher  v.  Mather,  133  N.  Y.  590,  595. 
See  also  Maupin  on  Marketable  Titles  (2nd  Ed.),  §  106. 

28  Citing  Mattanch  v.   Walsh,    136  Iowa  225;   113  N.   W.   818. 

»  Citing  Hickey  v.  Morrell,  102  N.  Y.  463 ;  7  N.  E.  325 ;  55  Am.  Rep.  824  ;  Cnlley 
T.  Jones.  164  Ind.  168;  73  N.  E.  94 ;  Murray  v.  Tolman.  162  111.  417;  41  N.  E.  748; 
McKnlght  v.  Thompson,  39  Neb.  752  ;  58  N.  W.  453  ;  People  v.  Peckens.  153  N.  Y.  576 ; 
47  N.  E.  883 ;  Horton  v.  Lee,  106  Wis.  439 ;  '82  N.  W.  360 ;  McDonald  v.  Smith.  139 
Mich.  211;  102  N.  W.  669;  Stack  v.  Nolte,  29  Wash.  188;  69  Pac.  753;  Mountain  v. 
Day,  91  Minn.  249 ;  97  N.  W.  883 ;  Morgan  v.  Dinges,  23  Neb.  271  ;  36  N.  W.  544  ;  8 
Am.  St.  Rep.  121.  See  also  Crompton  v.  Beedle,  75  Atl.  335  (Vt.  1910). 


ACTS   NOT   USUALLY   CONSIDERED   FRAUDULENT.          303 

The  law  on  this  subject  is,  however,  not  free  from 
conflict,  and  some  of  the  authorities  do  not  regard  an  ex- 
pression of  value  as  a  basis  for  fraud  unless  the  prop- 
erty is  at  a  distance  and  the  vendor  prevents  the  vendee 
from  seeking  information.30 

§  291.    When  Expression  of  Opinion  is  Fraudulent. 

All  that  can  be  said,  therefore,  when  referring  to  the 
subject  in  a  general  way,  is  that  an  expression  of  opinion 
or  of  value  may  sometimes  constitute  fraud.31  "  There 
is  no  certain  rule  by  the  application  of  which  it  can  be 
determined  when  false  representations  constitute  mat- 
ters of  opinion  or  matters  of  fact.  Each  case  in  a  large 
measure  must  be  judged  upon  its  own  circumstances."32 
But  "  the  opinion  of  an  expert  is  such  a  fact  which  he 
cannot  knowingly  misstate  without  incurring  legal  liabil- 
ity."33 

A  broker  was  held  liable  for  misrepresenting  the 
value  of  land  and  thus  inducing  a  person  to  loan  money 
thereon  on  mortgage,  to  the  loss  of  the  lender.34 

Dolan  v.  Cummings,  116  App.  Div.  787  (N.  Y.  1907), 
presents  a  case  showing  a  still  different  phase,  where  it 
may  be  said  that  there  was  fraud  with  respect  to  the 
value  of  property.  The  headnote,  which  tersely  gives  the 
law  of  the  case,  states:  "A  relation  of  confidence  and 
trust  exists  between  brothers  and  sisters  who  are  ten- 
ants in  common  of  lands,  and  if  one  tenant  conceals  the 
fact  that  he  has  had  a  specific  offer  for  the  real  estate  and 
induces  his  co-tenants  to  sell  their  interest  to  him  at  a 
much  lower  value,  they  are  entitled  to  rescind  the  sale 
on  discovering  the  offer.  Under  such  circumstances  it 

*>Hetland   v.   Bilstad,    118   N.   W.   424    (Iowa   1908). 

"See  also  Snively  v.  Meixsell,  97  111.  Apr.  370-373  (1901),  where  many  authorities 
are  cited. 

32  Reeves  v.  Corning,  51  Fed.   Rep.  774.  quoted  In  Snively  v.  Melxsell,  supra. 

33  Conlan  v.  Roemer,  52  N.  J.  L.  58   (1889),    (citing  Plcard  v.   McConnlck,  11  Mich. 
68;   Kost  v.   Bender,   25  Mich.   515;  Stewart  v.  Steam,   63  N.   H.  99;  Wise  v.   Fuller,   2 
Stew.   Eq.  257). 

M  Rubens  v.  Mead,  53  Pac.  Rep.  432   (Cal.  1898). 


304  FRAUD. 

is  incumbent  upon  the  purchaser  to  show  affirmatively 
that  no  deception  was  practiced;  and  when  it  appears 
that  he  not  only  concealed  the  offer  he  had  received,  but 
advised  his  vendee  not  to  see  the  other  owners  and  repre- 
sented to  them  that  he  took  great  risks  in  buying  the 
property,  he  is  guilty  of  false  representation,  and  the 
sale  should  be  rescinded." 


CHAPTER  XXX. 

WHAT   CONSTITUTES   FRAUD.    ACTS   USUALLY 
CONSIDERED  FRAUDULENT. 

§  292.    General  Statement. 

Fraud  may  be  based  on  representations  that  others 
have  offered  a  certain  price  for  the  property,  or  that  a 
certain  price  was  paid  for  the  property,1  or  that  the  prop- 
erty brings  a  certain  rental,  or  as  to  improvements  on 
the  property,  or  as  to  its  situation,  or  with  respect  to  the 
maturity  of  the  mortgages  thereon,  or  even  with  respect 
to  the  vendor's  title.  (§§  293-300.) 

§  293.    Representation  That  Certain  Price  Had  Been 
Offered. 

"A  false  representation  that  a  person  had  offered  to 
purchase  the  property  from  the  owner  for  a  fixed  price, 
when  in  fact  the  only  offer  made  was  an  offer  for  a  very 
much  smaller  price,  is  actionable  if  a  person  thereby  is 
induced  to  buy  the  property,  anticipating  that  he  may 
sell  to  the  person  who  made  the  first  offer,  and  supposing 
the  amount  stated  to  have  been  true.  Such  a  statement 
is  not  one  as  to  the  value  of  property,  but  is  the  state- 
ment of  a  fact,  namely,  the  offer  made  by  the  first  per- 
son, which  is  peculiarly  within  the  owner's  knowl- 
edge. ' ' 2 

1  As  to  this  the  authorities  are  conflicting. 

*  Isman  v.  Loring,   130  App.  Div.  849   (N.   Y.   1909)  ;  20  Cyc.  59. 

305 


306  FRAUD. 

§  294.    Representation  as  to  Value  and  Price  Paid  for 
Property. 

It  has  been  held  that  a  false  statement  by  a  vendor  to 
a  vendee  concerning  the  value  *  '  of  property  about  to  be 
sold,  will  not  sustain  an  action  for  fraud,  but  the  vendee 
in  such  cases  must  rely  on  his  own  judgment.  It  may  be 
that  the  rule  in  such  cases  would  be  different  if  the 
purchaser  was  prevented  by  any  act  or  artifice  of  the 
seller  from  exercising  his  judgment  in  ascertaining  the 
value.  '  '  3 

Where  the  question  was  not  one  arising  out  of  a  rep- 
resentation as  to  value  but  was  with  respect  to  a  fact 
which  might,  in  the  ordinary  course  of  business,  influ- 
ence the  action  and  control  the  judgment  of  the  pur- 
chaser, namely,  the  price  paid  for  the  property  by  the 
vendor  within  less  than  a  month  prior  to  the  sale,  it  was 
held  "  that  a  false  statement  with  respect  to  the  price 
paid  under  such  circumstances,  which  is  intended  to  in- 
fluence the  purchaser,  and  does  influence  him,  constitutes 
a  sufficient  basis  for  a  finding  of  fraud.  '  '  4  While  the 
vendor  may  not  be  bound  to  speak  on  the  subject,  if  he 
does,  he  should  speak  the  truth.5 

But  the  authorities  on  this  subject  are  in  conflict.6 
Thus  in  Bosley  v.  Monahan,  112  N.  W.  1102  (Iowa  1907) 
it  was  said:  "  There  seems  to  be  a  difference  of  opinion 
*  among  the  courts,  as  to  whether  a  statement  as 
to  the  price  paid  by  the  seller  or  the  price  which  has  been 
offered  to  the  seller  is  a  material  statement  of  fact  on 
which  the  buyer  may  rely,  or,  like  a  general  statement 
of  value,  to  be  treated  only  as  trade  talk.  This  court  has 
taken  the  view  that  such  statements  may  be  relied  on  as 
material  representations  of  fact.  '  '  7 

•Rills  v.   Andrews,   50  N.   Y.  83    (1874). 

*  Falrchtld  v.  McMahon,   139  N.  Y.  290,  293,  294   (1893). 


•20  Cyc.  54. 

7  Citing  Teachont  v.  Van  Hoesen.  76  Iowa  113;  40  N.  W.   96;   1  L.   E.  A.   664;   14 
Am.  St.   Rep.  206;  Dorr  v.  Cory,   108  Iowa  725;  78  N.  W.   682;   Scott  v.   Burnight,   131 


ACTS   USUALLY   CONSIDERED   FRAUDULENT.  307 

§  295.    Representations  as  to  Rentals. 

Fraud  may  be  based  on  false  statements  of  rental.8 
Misrepresentations  as  to  rental  of  the  property  made  by 
the  broker  is  a  sufficient  basis  for  rescission  of  the  con- 
tract.9 "  The  statement  by  a  vendor  that  the  income 
from  a  property  is  greater  than  it  in  fact  is,  is  a  fraud 
for  which  an  action  will  lie."10  The  purchaser  need 
make  no  effort  to  ascertain  from  the  tenants  the  actual 
rent,  where  the  vendor  diverts  him  from  inquiry,  as  the 
vendee  has  a  right  to  rely  upon  the  mere  statement  of 
the  vendor  or  his  broker.  Want  of  diligence  in  discover- 
ing the  fraud  is  not  sufficient  to  deprive  a  party  of  his 
right  to  rescind  a  fraudulent  contract.11  But  statements 
made  by  brokers  not  employed  by  the  vendor,  will  not 
support  a  rescission,  as  where  the  brokers  really  repre- 
sent the  purchaser  but  the  seller  voluntarily  pays  the 
commission.  12 

In  Goodman  v.  Hess,  56  Misc.  482  (N.  Y.  1907),  a  dis- 
crepancy of  $264  in  the  statement  of  the  annual  rentals 
was  held  material,  the  vendor  having  stated  them  to  be 
$5,325  per  annum.  This  was  a  case  in  which  the  pro- 
posed purchaser  refused  to  enter  into  a  contract  on  ac- 
count of  such  misrepresentation  and  the  broker  was  held 
entitled  to  commissions.  Where  a  purchaser  is  induced 
to  take  title  by  a  false  representation  as  to  the  rents, 
11  the  measure  of  damages  is  the  difference  between  the 
market  value  of  the  premises  if  they  had  been  as  repre- 
sented and  their  actual  market  value.'*13 


*  Kreshover  T.    Burger.    135   App.   Dlv.    27    (N.   Y.    1909)  ;   Remmers  v.   Berbling,   66 
Misc.  291   (N.  Y.    1910)  ;  Hecht  v.   Metzler,  48  Pac.  40   (Utah   1897).    (citing  DeFrees  v. 
Carr,  8  Utah  488;  33  Pac.  217:  Grifflng  T.   Diller,  21   N.   Y.  Supp.  407;  Wise  v.  Fuller, 
29  N.  J.  Eq.  257;  Speed  v.  Holllngsworth.  38  Pac.    (Kans.)  497). 

•  Forster  v.  Wllhusen.    14  Misc.   520   (N.   Y.   1895). 

1°  Conlan  v.  Roemer.  52  N.  J.  I,.  56  (1889),  (citing  Wise  v.  Fuller,  2  Stew.  Eq. 
257;  Dimmock  v.  Hallett.  L.  R.  2  Ch.  App.  21). 

11  Forster  v.  Wllhnsen.  14  Misc.  520  (N.  Y.  1895).  See  also  Prince  v.  Jacobs,  80 
App.  Dlv.  243  (N.  Y.  1903). 

"  Rothsteln  v.   Isaac,    124  App.   Dlv.   133   (N.   Y.   1908). 

"Ettllnger  v.  Well,  184  N.  Y.  182  (1906);  further  appeal,  131  App.  Dlv.  784 
(N.  Y.  1909). 


308  FRAUD. 

§  296.    Representations  as  to  Improvements. 

Where  it  was  claimed  that  the  vendor  represented 
that  the  property  had  gas  and  water,  and  the  party 
charged  with  making  the  representations  claimed  that  he 
only  made  a  qualified  representation,  ' '  that  Babylon  had 
water,  gas  and  all  facilities  and  that  this  property  was 
within  Babylon,"  it  was  held  that  the  representation, 
while  literally  it  might  be  true,  was,  as  it  carried  with  it 
a  suggestion  of  falsehood  when  taken  in  connection  with 
other  facts,  made  to  convey  a  fraudulent  purpose.14 

§  297.    Representations  as  to  Situation  of  Property. 

A  representation  that  lots  are  situated  five  to  ten 
minutes'  walk  from  railroad  station,  when  in  fact  they 
are  a  mile  and  a  half  or  two  miles  therefrom,  is  a  false 
representation.15  Where  wrong  land  is  pointed  out,  re- 
covery may  be  had; 16  and  also  where  the  boundaries  are 
misrepresented.17 

§  298.    Representations  as  to  Mortgages  on  Property. 

A  representation  by  the  vendor  that  a  mortgage  on 
the  property  could  remain  as  long  as  interest  was  paid, 
was  held  sufficient  to  avoid  a  contract  where  the  mort- 
gagee had  made  no  such  arrangement.18  In  this  case 19 
the  authorities  were  reviewed  as  to  the  right  of  a  vendee 
to  recover  a  deposit  made  on  an  oral  contract  for  the  sale 
of  property,  entered  into  on  a  representation  that  a 
mortgage  then  on  the  property  could  remain  as  long  as 
interest  was  paid.  The  mortgagee  had  in  fact  made  no 
such  arrangement,  and  it  was  held  that  the  vendee  could 
rescind  and  recover  his  deposit  on  account  of  the  fraud. 

"Scarsdale  Pub.   Co.   v.  Carter,   63  Misc.   276   (N.  Y.   1909).     See  also  Hansen  v. 
Kline,   113  N.  W.  504   (Iowa  1907). 
1B  Id. 

18  Stelting  v.   Bank  of  Sparta,  136  Wise.  369   (1908). 
17  Davis  v.  Nuzum,  1  L.  R.  A.  774   (Wise.  1888). 
"Bellman  v.  Strauss,  2  Hilt.  9  (N.  Y.  1858). 

19  Id. 


ACTS    USUALLY    CONSIDERED   FRAUDULENT.  309 

§  299.  Representation  that  Others  Want  the  Property. 
In  Hammond  v.  Pennock,  61  N.  Y.  145,  151  (1874), 
one  of  the  features  of  the  fraud  was  the  overworked  as- 
sertion that  somebody  else  wanted  the  property  and  if 
the  buyer  intended  to  buy  he  had  better  make  up  his 
mind  at  once.  There  were,  however,  other  material  mis- 
representations. 

§  300.    Representations  as  to  Title  of  Vendor, 

There  may  be  fraud,  too,  in  respect  to  the  title  of  the 
vendor,20  as  for  instance  where  the  vendor  induced  the 
purchaser  to  take  a  deed  on  the  representation  that  he 
owned  the  property  and  had  a  good  title,  when  in  fact 
he  had  but  tax  sale  certificates.21  "  Proof  of  mere  mis- 
representation as  to  ownership  may  demand  rescission 
of  a  contract,  but  will  not  sustain  an  action  for  deceit,  in 
the  absence  of  allegation,  sufficient  evidence  and  finding 
of  intent  to  deceive. ' ' 22 

20  Kerwln  v.  Friedman,  127  Mo.  App.  522  (1907)  ;  Meeks  v.  Garner,  11  L.  B.  A. 
196  (Ala.  1890). 

a  Grosjean  v.  Galloway,  64  App.  Dlv.  547  (N.  Y.  1901);  and  see  Maupln  on  Mar- 
ketable Titles  (2nd  Ed.),  pp.  236  et  seq. 

^Zagarino  v.  Kurzrok,  135  App.  Dlv.  764  (N.  Y.  1909),  (citing  Wakeman  v. 
Dalley,  51  N.  Y.  27;  Mclntyre  v.  Buell,  132  N.  Y.  192). 


CHAPTER  XXXI. 
NEGLIGENCE  ON  PART  OF  VENDEE. 

§  301.    General  Statement. 

The  authorities  are  not  entirely  harmonious  as  to  how 
far  a  vendee  may  rely  upon  the  representations  of  the 
vendor.  In  some  jurisdictions  it  is  held  that  represen- 
tations to  be  relied  upon  must  be  such  as  an  ordinarily 
prudent  man  would  rely  upon.  In  other  words,  the  ven- 
dee must  exercise  ordinary  care.  In  other  jurisdictions 
it  is  held  that  negligence  on  the  part  of  the  vendee  is  no 
bar  to  relief  in  case  of  fraud.  Most  authorities  are  in 
accord  that  the  exercise  of  prudence  and  caution  is  ex- 
cused (1)  where  confidential  relations  exist  between  the 
parties,  and  (2)  where  fraud  or  artifice  is  used  to  divert 
or  prevent  inquiry  or  investigation,  or  to  mislead.  (§§ 
302-307.) 

§  302.    May  Vendee  Rely  Upon  Statement  of  Vendor? 

As  to  whether  a  person  may  rely  absolutely  upon  rep- 
resentations made,  or  is  bound  to  make  independent  in- 
vestigation, the  authorities  are  not  altogether  clear  and 
harmonious.  In  Mead  v.  Bunn,  32  N.  Y.  279  (1865),  it 
is  said  that  it  is  a  mistake  to  assume  ' '  that  a  false  repre- 
sentation by  one  of  the  parties  to  a  contract  puts  the 
other  on  inquiry  as  to  its  truth.  Every  contracting  party 
has  an  absolute  right  to  rely  on  the  express  statement  of 
an  existing  fact,  the  truth  of  which  is  known  to  the  oppo- 
site party  and  unknown  to  him,  as  the  basis  of  a  mutual 
engagement ;  and  he  is  under  no  obligation  to  investigate 

310 


NEGLIGENCE    ON    PART    OF    VENDEE.  311 

and  verify  statements,  to  the  truth  of  which  the  other 
party  to  the  contract,  with  full  means  of  knowledge,  has 
deliberately  pledged  his  faith."1  In  Forster  v.  Wil- 
husen,  14  Misc.  520  (N.  Y.  1895),  it  was  held  that  where 
by  his  agent  an  owner,  with  intent  to  deceive  the  pur- 
chaser, made  representations  as  to  the  rentals  of  the  prop- 
erty, and  those  representations  were  untrue  and  material 
in  inducing  the  purchaser  to  purchase,  and  where  with 
due  diligence,  after  discovery  of  the  fraud,  the  purchaser 
demanded  a  rescission  of  the  contract  and  the  return  of 
the  money  paid  upon  it,  the  facts  sufficed  to  support  an 
action.  It  is  no  answer  that  the  purchaser  made  no 
effort  to  ascertain  from  tenants  the  actual  rent,  where 
the  owner  diverted  the  purchaser  from  such  inquiry.  In 
fact,  the  purchaser  has  a  right  to  rely  on  the  mere  state- 
ment of  the  broker,  and  want  of  diligence  in  discovering 
the  fraud  is  not  sufficient  to  deprive  a  party  of  his  right 
to  rescind  a  fraudulent  contract.  Moreover,  a  mistake 
or  innocent  misrepresentation,  if  material,  is  enough  for 
rescission  of  the  contract. 

In  an  action  brought  to  recover  damages  for  false 
representations  alleged  to  have  been  made  in  respect  to 
liens  and  encumbrances  upon  the  property  sold,  the  court 
said  that  the  fact  that  the  plaintiff  could  have  informed 
himself  as  to  encumbrances  by  an  examination  of  the  pub- 
lic records  does  not  preclude  him  from  maintaining  his 
action.  "  Negligence  is  no  defense  to  fraud.  That  the 
victim  was  an  easy  mark  has  not  yet  been  heard  to  jus- 
tify garroting. ' ' 2 

§  303.    Vendor  Not  Ordinarily  Required  to  Volunteer 
Information. 

On  the  other  hand  it  is  said  that  "  the  general  rule  is, 
that  a  party  engaged  in  a  business  transaction  with  an- 

»And  see  Townsend  v.   Felthousen,    156   N.    Y.   624,   625    (1898). 
2  BlumenfelU   v.   Stine,   42  Misc.   413    (N.    Y.    1904). 


312  FEAUD. 

other  can  commit  a  legal  fraud  only  by  fraudulent  mis- 
representations of  facts,  or  by  such  conduct  or  such  arti- 
fice for  a  fraudulent  purpose  as  will  mislead  the  other 
party  or  throw  him  off  from  his  guard,  and  thus  cause 
him  to  omit  inquiry  or  examination  which  he  would 
otherwise  make.  A  party  buying  or  selling  property,  or 
executing  instruments,  must  by  inquiry  or  examination 
gain  all  the  knowledge  he  desires.  He  cannot  proceed 
blindly,  omitting  all  inquiry  and  examination,  and  then 
complain  that  the  other  party  did  not  volunteer  all  the 
information  he  had.  Such  is  the  general  rule.  But  there 
are  exceptions  to  this  rule.  Where  there  is  such  a  rela- 
tion of  trust  and  confidence  between  the  parties,  that  the 
one  is  under  some  legal  or  equitable  obligation  to  give 
full  information  to  the  other  party — information  which 
the  other  party  has  a  right,  not  merely  in  foro  conscien- 
ti(B,  but  juris  et  de  jure,  to  have,  then  the  withholding  of 
such  information  purposely  may  be  a  fraud.3  It  is  not 
always  easy  to  define  when  this  relation  of  trust  and 
confidence  exists ;  and  no  general  rule  can  be  formulated 
by  which  its  existence  can  be  known. ' ' 4 

§  304.    Vendee  Required  to  Exercise  Caution. 

Again,  it  is  said,  ' '  Prudence  and  caution  must  be  ex- 
ercised. The  representations  must  be  such  that  an  ordi- 
narily prudent  man  would  rely  on  as  true,  to  justify  a 
person  in  relying  upon  them. "  5  In  the  same  case,  it  was 
said:  "An  instruction  which  told  the  jury  that  if,  by  an 
ordinary  degree  of  precaution,  the  plaintiff  could  have 
ascertained  the  falsity  of  the  representations  complained 
of,  then  the  plaintiff  was  not  entitled  to  recover,  was 

•Citing  Story's  Eq.  Jur.,  §§  207  et  seq. ;  Hadley  v.  Clinton  Comity  Importing  Co., 
13  Ohio  St.  B.  502;  Bench  v.  Sheldon,  14  Barb.  66;  Paul  v.  Hadley.  23  Barb.  521. 

«  Dambtnann  v.  Schulting,  75  N.  Y.  61.  62  (1878).  See  also  Denning  v.  Darling,  2 
L.  R.  A.  743  (Mass.  1889),  and  note. 

6  Press  T.  Hair,  133  111.  App.  534  (1907),  (citing  Grier  v.  Puterbaugh.  108  111. 
602;  Hutchinson  v.  Lyford,  123  111.  300;  Eames  T.  Morgan,  37  111.  260;  Dickinson  v. 
Atkins,  100  111.  App.  401). 


NEGLIGENCE   ON   PART   OF   VENDEE.  313 

held  a  correct  statement  of  the  law  in  Eames  v.  Morgan, 
37  111.  260."  In  another  case,6  it  was  said:  "  The  gen- 
eral rule  is  that  a  purchaser  must  exercise  common  pru- 
dence, and  if  he  fails  to  avail  himself  of  the  ordinary 
means  of  information  the  law  gives  him  no  redress.7  But 
defendants  cannot  invoke  this  rule,  because  of  their  ac- 
tive efforts  to  conceal  the  condition  of  the  mine,  to  thwart 
investigation  and  inquiry,  and  in  misrepresenting  the 
significance  of  conditions  that  were  apparent.  Such  con- 
duct brings  the  case  within  the  salutary  exception 
designed  to  avoid  encouragement  to  fraudulent  and  de- 
ceitful practices."8  In  Ripy  v.  Cronan,  115  S.  W.  794 
(Ky.  1909),  the  court,  after  quoting  from  20  Cyc.  49,  that 
the  rule  of  caveat  emptor  applies,  states  that  the  excep- 
tions to  the  rule  of  caveat  emptor  are:  "  First,  where 
confidential  relations  exist  between  the  two ;  and,  second, 
where  fraud  or  artifice  is  used  to  prevent  inquiry  or  in- 
vestigation. ' ' 

§  305.    Degree  of  Caution  Required  of  Vendee. 

In  Long  v.  Warren,  68  N.  Y.  426  (1876),  the  represen- 
tations alleged  to  be  false  were  as  to  the  non-existence 
on  the  farm  of  a  noxious  weed  known  as  quack  grass, 
which  rendered  the  farm  less  valuable.  The  defendant 
used  no  artifice  either  of  word  or  act  to  dissuade  or  turn 
away  or  hinder  the  plaintiff  from  making  inspection  of 
the  farm  for  himself.  The  plaintiff  had  passed  over  the 
farm,  and  had  he  taken  ordinary  pains  to  look  out 
for  this  grass,  he  would  have  perceived  it.  "  Where 
the  matter  is  not  peculiarly  within  the  knowledge  of 
the  defendant,"  says  the  court,  "and  the  plaintiff  has 

«Tooker  v.   Alston,   159  Fed.  603   (1907). 

'Citing  Andrus  v.  St.  Louis  Smelting  Co.,  130  U.  S.  643 ;  9  Sup.  Ct.  645;  32  L.  Ed. 
1054. 

8  Citing  Strand  v.  Griffith.  38  C.  C.  A.  444  ;  97  Fed.  854  ;  Henderson  v.  Henshall,  4 
C.  C.  A.  357;  54  Fed.  320.  See  also  Stewart  v.  Wyoming  Ranch  Co.,  128  U.  S.  383;  9 
Sup.  Ct.  101  ;  32  L.  Ed.  439. 


314  FRAUD. 

the  means  of  obtaining  correct  information,  apart  from 
the  statement  made  to  him,  he  may  not  recover  upon  the 
false  declaration.9  To  the  same  effect  is  Starr  v.  Bennett, 
5  Hill,  303.  The  representations  must  be  such  that  the 
vendee  has  no  means  of  discovering  their  falsity.  If  he 
does  not  avail  himself  of  the  means  of  knowledge  within 
his  reach,  he  will  not  be  entitled  to  the  aid  of  a  court  of 
equity.10  It  is  stated  in  Smith  v.  Countryman,  30  N.  Y. 
681,  though  obiter  perhaps,  that  statements  as  to  value 
of  property,  and  the  freedom  of  it  from  defects  which 
are  known,  to  the  one  making  them,  to  exist,  but  which 
might  by  the  exercise  of  reasonable  diligence  be  discov- 
ered, do  not,  if  false,  vitiate  the  contract.  In  Vernon  v. 
Keyes,  12  East,  632,  affirmed  4  Taunton,  488,  it  is  held 
that  a  seller  is  unquestionably  liable  to  an  action  of  de- 
ceit, if  he  fraudulently  misrepresent  the  quality  of  the 
thing  sold,  to  be  other  than  it  is,  in  some  particulars, 
which  the  buyer  has  not  equal  means  with  himself  of 
knowing.11  At  nisi  prius,  a  limitation  to  the  rule  was 
announced  as  follows:  Means  unused,  of  detecting  the 
falsity  of  representations,  are  not  a  bar  to  an  action,  but 
matter  for  the  jury,  and  if  the  jury  find  for  the  plaintiff, 
will  not  be  ground  for  a  reversal.12  But  we  are  not  now 
reviewing  the  verdict  of  a  jury  for  the  plaintiff,  but  are 
dealing  with  the  facts  as  a  general  proposition  as  if  we 
sat  in  the  place  of  a  jury,  and  are  not  called  upon  to  sanc- 
tion or  disapprove  that  holding  at  nisi  prius.  It  is  also 
said  in  one  case,  that  the  very  fact  of  a  warranty  having 
been  given,  would  tend  to  throw  the  warrantee  off  his 
guard,  and  prevent  him  from  making  a  close  examina- 
tion.13 But  that  is  where  he  has  taken  a  covenant,  and 
may  rely  upon  it." 

•Citing  Bayley  v.  Merrcl,  Cro.  Jac.   386. 

10  Citing  Tallman  v.  Green,  3  Sandf.  437. 

«  Referring  to  1  Kent.  484,  485 ;  Sherwood  v.  Salmon,  5  Day  439,  449. 

12  Citing  Bowing  v.   Stevens,   2  Carr  &  P.   337. 

"Citing  Holyday  v.   Morgan,  28  Law  J.   Q.   B.  9. 


NEGLIGENCE   ON   PAET   OF   VENDEE.  315 

§  306.    Vendee  Must  Exercise  Ordinary  Caution. 

' '  In  the  kindred  cases  of  false  pretences,  the  criminal 
law  holds  to  the  rule  we  have  above  given,  and  it  has 
been  resolved,  that  where  an  exercise  of  common  pru- 
dence and  caution  on  the  part  of  the  prosecutor,  would 
have  enabled  him  to  avoid  being  imposed  upon  by  the 
pretence  alleged,  there  can  be  no  conviction.14  The 
rule  is  summed  up  in  Addison  on  Torts:  When  the  real 
quality  of  the  thing  spoken  of  is  an  object  obvious  to  or- 
dinary intelligence,  and  the  parties  making  and  receiving 
the  representations  have  equal  knowledge,  or  equal 
means  of  acquiring  information,  and  the  truth  or  falsity 
of  them  may  be  ascertained  by  the  party  interested  in 
knowing,  by  the  exercise  of  ordinary  inquiry  and  dili- 
gence, and  they  are  not  made  for  the  purpose  of  throwing 
him  off  his  guard,  and  directing  him  from  making  the 
inquiry  and  examination,  which  every  prudent  person 
ought  to  make,  there  is  no  warranty  of  the  truth  of  the 
representations,  or  that  they  are  as  they  are  stated  to 
be,  and  there  are  no  false  and  fraudulent  warranties, 
within  the  legal  definition  of  that  phrase,  upon  which  an 
action  can  be  maintained.  The  rule  is  comprehensively 
stated  as  follows,  by  the  United  States  Supreme  Court  in 
Slaughter's  Administrators  v.  Gerson,  13  Wall.  383: 
'  They  must  be  representations  relating  to  a  matter  as 
to  which  the  complaining  party  did  not  have  at  hand  the 
means  of  knowledge.  Where  means  of  knowledge  are  at 
hand  and  equally  available  to  both  parties,  and  the  sub- 
ject of  the  purchase  is  equally  open  to  their  inspection, 
if  the  purchaser  does  not  avail  himself  of  those  means 
and  opportunities,  he  will  not  be  heard  to  say  in  impeach- 
ment of  the  contract  of  sale  that  he  was  drawn  into  it  by 
the  vendor's  misrepresentations.'  (See  also  Davis  v. 
Sims,  Lalor's  Hill  and  Denio,  234;  S.  In.  Co.  v.  Adam, 

"Citing  People  v.   Williams,  4  Hill  9. 


316  FRAUD. 

23  Pick,  256;  Mooney  v.  Miller,  102  Mass.  220.)    Some  of 
the  cases  cited  were  of  sales  of  land."15 

§  307.    Negligence  No  Bar  to  Relief  in  Cases  of  Wilful 
Fraud. 

"  The  principles  laid  down  in  Long  v.  Warren,  and 
the  cases  upon  which  it  rests,  have  never  been  applied  in 
this  state  (New  York)  to  a  case  where  it  is  simply  sought 
to  make  an  instrument,  which  by  mistake  or  fraud  fails  to 
express  the  prior  agreement  between  the  parties,  conform 
to  such  agreement.  The  authority  of  that  case  should 
not  be  extended  to  cases  not  clearly  within  the  prin- 
ciples there  laid  down.  It  is  certainly  not  just  that  one 
who  has  perpetrated  a  fraud  should  be  permitted  to  say 
to  the  party  defrauded  when  he  demands  relief  that  he 
ought  not  to  have  believed  or  trusted  him.  Where  one 
sues  another  for  negligence  his  own  negligence  contrib- 
uting to  the  injury  will  constitute  a  defense  to  the  action ; 
but  where  one  sues  another  for  a  positive,  wilful  wrong 
or  fraud,  negligence  by  which  the  party  injured  exposed 
himself  to  the  wrong  or  fraud  will  not  bar  relief.  If  the 
rule  were  otherwise,  the  unwary  and  confiding,  who  need 
the  protection  of  the  law  the  most,  would  be  left  a  prey 
to  the  fraudulent  and  artful  practices  of  evil-doers."16 

Where  there  is  no  fraud  or  circumvention,  some  au- 
thorities hold  that  it  is  not  for  the  courts  to  relieve  a 
party  from  the  mere  results  of  his  own  carelessness,  neg- 
ligence or  laches,  not  induced  by  the  conduct  of  the  other 
party.  "  But  if  a  party  is  led  to  forbear  inquiry  by  false 
representations  as  to  matters  material  and  not  collateral, 
intentionally  made  with  knowledge  of  their  falsity  for 
the  purpose  of  inducing  such  forbearance,  or  by  fraudu- 

»Long  v.  Warren,  68  N.  Y.  426  (1876).  See  also  Brauckman  v.  Leighton,  60  Mo. 
App.  43  (1894). 

"Albany  City  Savings  Inst.  v.  Bnrdlck,  87  N.  Y.  49  (1882)  ;  Judd  v.  Walker,  114 
S.  W.  979  (Mo.  1908)  ;  Banking  Co.  v.  Cunningham,  103  Me.  466  (1908),  (citing  Liv- 
ingston v.  Strong,  107  111.  295)  ;  U.  S.  Gypsum  Co.  v.  Shields,  106  S.  W.  724  (Tex. 
1908)  ;  Och  v.  M.  K.  &  T.  Ry.  Co.,  130  Mo.  71,  72  (1895). 


NEGLIGENCE   ON   PART   OF   VENDEE.  317 

lent  artifice  or  deceitful  maneuvers  resorted  to  with  the 
like  knowledge  and  purpose,  upon  which  he  in  fact  relies, 
the  question  of  whether  a  careful  and  prudent  man  would 
have  been  misled  in  like  circumstances  is  immaterial."  17 
The  rule  that  negligence  of  the  party  defrauded  in 
failing  to  read  a  paper  which  he  signed  precludes  him 
from  attacking  its  validity,  does  not  prevail* in  this  state 
(New  York)  though,  as  was  said  in  Wilcox  v.  American 
Tel.  Co.,  176  N.  Y.  117  (1903),  there  may  be  dicta  in  the 
text  books  and  decisions  in  other  jurisdictions  to  that  ef- 
fect.18 It  was  expressly  repudiated  by  the  New  York  Court 
of  Appeals  in  Albany  City  Savings  Institution  v.  Burdick, 
87  N.  Y.  40.19  The  duty  of  self-protection  is  also  dis- 
cussed in  Smith  v.  Countryman,  30  N.  Y.  655  (1864). 

"Crompton  v.  Beedle,  75  All.  336   (Vt.   1910). 
"And  see  Rollins  v.  Qulmby,  200  Mass.  162  (1908). 

"See  also  Welles  Y.  Yates,  44  N.  Y.   525   (1871);   Smith  v.  Smith,   134  N.   Y.   62 
(1892). 


CHAPTER  XXXII. 
WAIVER.    RESCISSION.    REMEDIES. 

§  308.    General  Statement. 

The  right  of  rescission  on  account  of  fraud  may  be 
waived  by  recognizing  the  contract  as  binding,  after 
knowledge  of  the  fraud.  (§§  309-312.) 

A  person  who  has  been  induced  by  fraudulent  repre- 
sentations to  buy  property  has  three  remedies  to  elect 
from:  (1)  He  may  rescind  the  contract  absolutely,  re- 
store or  offer  to  restore  the  property,  and  sue  at  law  to 
recover  the  consideration  parted  with;  (2)  he  may  bring 
suit  to  rescind;  and  (3)  he  may  retain  what  he  has  re- 
ceived, and  sue  at  law  for  damages.  (§§  313-320.) 

Rescission,  if  resorted  to,  must  be  prompt.  (§§  310, 
316.) 

§  309.    Waiver  of  the  Fraud. 

The  right  to  rescind  a  contract  secured  by  fraud  may 
be  waived,  if  a  party  with  knowledge  that  a  fraud  has 
been  perpetrated  upon  him,  confirms  the  transaction  by 
making  new  agreements  or  engagements  respecting  it, 
or  retains  and  uses  the  subject  of  it  after  knowledge,  or 
otherwise  recognizes  it  as  binding.1  The  court  in  Pryor 
v.  Foster,  130  N.  Y.  175,  176  (1892)  quotes  from  Bigelow 
on  Fraud,  184,  as  follows :  ' '  If  a  party  with  knowledge 
that  a  fraud  has  been  perpetrated  upon  him  in  a  parti- 

1  Pryor  v.  Poster,  130  N.  T.  175.  176  (1892)  ;  Schiffer  v.  Dietz.  83  N.  Y.  307,  308 
(1880)  ;  Remmers  v.  BerbHng,  66  Misc.  291  (N.  Y.  1910)  ;  State  Bank  v.  Brown,  119 
N.  W.  81  (Iowa  1909)  ;  Schmidt  v.  Mesneer,  48  Pac.  54  (Cal.  1897),  (citing  Doherty  v. 
Bell,  55  Ind.  205;  St.  John  v.  Hendrickson,  81  Ind.  350;  Negley  v.  Lindsay,  67  Penn.  St. 
217;  Nornnan  v.  Land  Co.,  81  Cal.  1). 

318 


WAIVER.      RESCISSION.      REMEDIES.  319 

cular  transaction,  confirmed  the  transaction  by  making 
new  agreements  or  engagements  respecting  it,  or  by 
retaining  and  using  the  subject  of  it  after  knowledge,  or 
otherwise  recognize  it  as  binding,  he  thereby  waives  the 
right  to  treat  it  as  invalid  and  abandons  his  right  to 
rescind  if  it  be  a  case  of  contract,  or  to  redress  if  it  be  a 
tort  not  attended  with  a  contract  with  the  wrongdoer. 
If,  however,  the  fraud  result  in  a  contract,  performance 
of  the  same  after  discovering  that  it  was  fraudulently 
obtained  by  the  opposite  party  does  not  preclude  a  per- 
son from  suing  for  damages  on  account  of  the  fraud.  The 
injured  party  may  retain  the  benefits  of  the  contract, 
confirm  its  validity,  and  still  recover  damages  for  the 
fraud  by  which  he  was  induced  to  make  it;  or  he  may 
recoup  any  damages  which  he  has  sustained  if  the  oppo- 
site party  sue  him  for  money  due  on  the  contract  or  other 
failure  to  perform  it. " 2 

§  310.    What  Constitutes  Waiver  of  Fraud. 

Where  any  benefit  is  received  under  the  contract, 
after  knowledge  of  the  fraud,  it  is  a  ratification  and 
affirmance  of  the  contract.3  The  right  to  rescind  a  con- 
tract for  fraud  must  be  exercised  immediately 4  upon  its 
discovery,  and  any  delay  in  doing  so,  or  the  continued 
employment,  use  and  occupation  of  the  property  received 
under  the  contract,  will  be  deemed  an  election  to  affirm 
it.5  Continuance  in  possession  after  discovery  of  the 
fraud  is  evidence  of  an  intent  to  abide  by  the  contract.6 

But  the  mere  bringing  of  an  action  on  a  contract,  un- 
less brought  with  knowledge  of  the  fraud  which  induced 
the  contract,  is  not  a  binding  election  to  ratify  the  con- 
tract nor  a  waiver  of  the  right  to  rescind  the  contract 

*Modlln  v.  Railroad,  145  N.  C.  223  (1907). 
»Cobb  v.   Hatfleld,  46  N.   Y.  536   (1871). 
4  See  |  316  infra. 

8  Strong  v.  Strong,  102  N.  Y.  73  (1886).  See  also  Pryor  v.  Foster,  130  N.  Y.  175 
(1892). 

•Schlffer  v.  Dletz,   83  N.   Y.   308   (1880). 


320  FRAUD. 

for  the  fraud.7  But  by  suing  on  the  contract  after  knowl- 
edge of  the  fraud,  the  right  to  disaffirm  on  account  of  the 
fraud  is  waived.8  The  fact  that  a  deed  of  the  premises 
was  executed  and  delivered  subsequent  to  the  fraud,  is 
no  defense  unless  the  deed  was  received  and  accepted 
with  notice  of  the  fraud.9 

§  311.    Full  Knowledge  of  Fraud  Not  Necessary  to 
Waiver. 

It  is  not  necessary,  in  order  to  make  the  election  con- 
clusive, that  the  party  electing  shall  be  acquainted  with 
all  the  evidence  which  may  tend  to  prove  the  fraud.  It 
is  sufficient  if  he  has  knowledge  of  all  the  material  facts 
showing  the  actual  perpetration  of  fraud  upon  him.10 
And  it  has  been  said  that  the  question  of  waiver  is 
largely  one  of  intent.11  But  the  doctrine  that  any  act  in 
affirmance  of  a  contract  after  discovery  of  fraud,  defeats 
the  right  of  rescission,  is  not  necessarily  applicable  to 
an  action  for  damages  founded  in  fraud.12 

§  312.    Recitals  in  Contract  Do  Not  Operate  as  Waiver 
of  Fraud. 

A  purchaser  is  not  estopped  from  rescinding  a  con- 
tract of  sale  for  fraud,  by  a  recital  therein  that  no  repre- 
sentations have  been  made  for  the  purpose  of  inducing 
the  sale.13  A  clause  which  provides  that  "  no  verbal 
agreements  affecting  the  validity  of  this  contract  will  be 
recognized,"  does  not  obviate  the  results  of  fraud,  for 

T  Equitable  Co-operative  Foundry  Co.  v.   Hersee,    103  N.   Y.   25   (1886). 

«Conrow  v.  Little,  115  N.  Y.  387  (1889);  Robb  v.  Vos,  155  U.  S.  16  (1894); 
Crook  v.  First  Nat.  Bk.,  83  Wise.  31  (1892).  And  see  Johnson  Co.  v.  Mo.  Pac.  Ry.  Co., 
126  Mo.  344. 

•Blumenfeld  v.  Stine,  42  Misc.  413   (N.  Y.  1904). 

w  Bach  v.  Tnch,  126  N.  Y.  53  (1891)  ;  E.  Bement  &  Sons  v.  La  Dow,  66  Fed.  Rep. 
195  (1895). 

11  Pryor  v.  Foster,  130  N.  Y.   177  (1892). 

u  N.  Y.  Land  Imp.  T.  Chapman,  118  N.  Y.  295  (1889) ;  Pryor  v.  Foster,  130  N.  Y. 
171  (1892). 

»»  Bridger  T.  Goldsmith,  143  N.  Y.  424   (1894). 


WAIVER.      RESCISSION.      REMEDIES.  321 

fraud  is  not  an  agreement.  It  is  an  imposture  practiced 
by  one  upon  another.  It  may  be  used  as  an  inducement 
to  enter  into  an  agreement.14  Where  a  tenant  sues  for 
damages  sustained  by  reason  of  the  false  representations 
of  the  landlord,  an  agreement  that  the  landlord  should 
not  be  liable  for  any  damages  caused  by  or  arising  from 
any  source  whatsoever  in  or  about  the  premises,  is  not 
a  waiver  of  damages  caused  to  the  tenant  by  the  fraud  of 
the  landlord.15 


§  313.    Remedies  for  Fraud.    Measure  of  Damage. 

' '  It  is  elementary  that  a  person  who  has  been  induced 
by  fraudulent  representations  to  become  the  purchaser 
of  property  has,  upon  the  discovery  of  the  fraud,  three 
remedies  open  to  him,  either  of  which  he  may  elect: 
First,  he  may  rescind  the  contract  absolutely,  and  sue  to 
recover  the  consideration,  in  which  case  he  must  first  re- 
store or  offer  to  restore  the  property;  second,  he  may 
bring  action  to  rescind ;  third,  he  may  retain  what  he  has 
received,  and  bring  an  action  at  law  to  recover  the  dam- 
ages sustained,16  in  which  case  the  measure  of  his  recov- 
ery is  the  difference  between  the  value  of  the  article  sold 
and  what  it  should  be  according  to  the  representations.17 
In  Krumm  v.  Beach,  96  N.  Y.  398  (1884),  it  was  held  that 
where  a  party  seeks  the  third  remedy,  whether  the  rep- 
resentations relate  to  the  title  or  to  matters  collateral 
to  the  land,  the  measure  of  the  damages  is  full  indemnity 
to  the  injured  party, — the  entire  amount  of  his  loss  occa- 
sioned bv  the  fraud."18 


i«  Scarsdale  Pub.  Co.  v.  Carter,  63  Misc.  275  (N.  Y.  1909)  ;  U.  S.  Gypsum  Co.  v. 
Shields.  100  S.  W.  724  (Tex.  1908). 

"••  Klnmenfeld  v.  Wagner,  63  Mlse.   69    (N.   Y.   1909). 

i«  JuiUl  v.  Walker,  114  S.  W.  979  (Mo.  1908);  Mortlin  v.  Railroad,  145  N.  C.  223 
(1007);  Mlnazek  v.  Libera,  83  Minn.  288  (1901);  St.  John  v.  Hendrlckson,  81  Ind.  350 
(1882K 

"Citing  Vail  v.    Reynolds.    118  N.   Y.   297   (1889). 

is  Grosjean  v.  Galloway,  64  App.  Dlv.  547  (N.  Y.  1901).  As  to  proof  of  fraud  at 
law  and  ID  equity,  see  §  320  infra. 


322  FRAUD. 

§  314.    Remedies  for  Fraud.    Action  to  Rescind. 

"A  person  who  has  been  induced  by  fraudulent  rep- 
resentations to  become  the  purchaser  of  property  has 
upon  discovery  of  the  fraud  three  remedies  open  to  him, 
either  of  which  he  may  elect.  He  may  rescind  the  contract 
absolutely  and  sue  in  an  action  at  law  to  recover  the  con- 
sideration parted  with  upon  the  fraudulent  contract.  * 
He  may  bring  an  action  in  equity  to  rescind  the  contract 
and  in  that  action  have  full  relief.19  Such  an  action  is 
not  founded  upon  a  rescission,  but  is  maintained  for  a 
rescission,20  and  it  is  sufficient,  therefore,  for  the  plain- 
tiff to  offer  in  his  complaint  to  return  what  he  has  re- 
ceived and  make  a  tender  of  it  on  the  trial.  Lastly,  he 
may  retain  what  he  has  received  and  bring  an  action  at 
law  to  recover  the  damages  sustained. ' ' 21 

It  may  be  observed  that  in  the  case  just  quoted  from,22 
the  court  said  that  * '  no  question  was  raised  by  answer  or 
during  the  trial  as  to  the  jurisdiction  of  the  court  and 
neither  party  demanded  a  trial  by  jury.  Both  parties 
tried  the  case  on  the  theory  that  if  the  facts  alleged  in 
the  complaint  were  established  the  plaintiff  would  be  en- 
titled to  equitable  relief  of  some  kind, ' '  but  we  fail  to  see 
how  any  objection  as  to  the  jurisdiction  of  a  court  of 
equity  could  prevail  where  the  action  is  brought  for  the 
relief  secondly  above  mentioned. 

§  315.    Liability  on  Contract  in  Case  of  Fraud. 

* '  Whatever  facts  would  enable  a  party  to  avoid  a  con- 
tract, are  equally  available  to  enable  him  to  defeat  one 
sought  to  be  enforced  against  him. " 23  "  If  a  vendee  of 
land  who  was  induced  to  purchase  by  means  of  false  rep- 

"  Citing  Allerton  v.  Allerton,  50  N.  Y.  670. 

20  See  §   316  infra. 

21  Davis  v.  Rosenzweig  Realty  Co.,   192  N.  Y.   128   (1908),  quoting  from  Vail  v.  Rey- 
nolds,  118  N.  Y.  297.     See  also  Prince  v.  Jacobs,  80  App.  Div.  243   (N.   Y.   1903). 

22  Davis  v.   Rosenzweig  Realty  Co.,   192  N.  Y.   132  (1908). 

23  Smith    v.    Countryman,    30    N.    Y.    670    (1864);    Pryor   v.    Foster,    130   N.    Y.    176 
(1892);  Johnson  v.   Sheridan  Lumber  Co.,   93  Pac.  473   (Ore.   1908). 


WAIVER.      RESCISSION.      REMEDIES.  323 

resentations,  does  not  rescind,  and  offer  to  reconvey,  he 
may  only  sue  for  damages  for  the  fraud,  or  plead  a  coun- 
terclaim for  such  damages  in  an  action  against  him  for 
the  purchase  price.  He  cannot  exonerate  himself  from 
liability  for  the  purchase  price,  except  by  rescinding  and 
offering  to  reconvey  on  discovering  the  fraud.  Krumm  v. 
Beach,  96  N.  Y.  398  (1884)." 24 

§  316.    Rescission. 

A  party  who  would  rescind  a  contract  upon  the  ground 
of  fraud,  must  act  promptly,25  and  restore  or  offer  to  re- 
store to  the  other  party  what  he  received  under  it.26  But 
delay  in  rescinding  may  be  explained,  and  ordinarily  a 
person  cannot  be  charged  with  delay  in  rescinding  until 
after  he  has  discovered  the  fraud.  The  vendee's  rescis- 
sion of  the  contract  for  the  fraud  of  the  vendor,  dissolves 
it  db  initio.27  "  The  election  to  rescind  a  contract  for 
fraud  evidenced  by  the  bringing  of  an  action  based  there- 
on is  irrevocable  and  prevents  the  bringing  of  an  action 
on  the  contract  itself,  and  vice  versa,  when  the  plaintiff 
has  knowledge  of  the  fraud. ' ' 28 

11  Rescission  has  to  be  made  in  advance  of  an  action 
to  recover  back  money  paid  on  a  fraudulent  contract  of 
purchase,  but  not  to  bring  a  suit  for  a  rescission.  Such  a 
suit  is  not  based  on  a  previous  rescission;  it  is  for  a  re- 
scission, and  it  suffices  that  the  complaint  itself  is  a  rescis- 
sion by  necessary  offers  to  tender,  to  restore,  etc.29  The 
distinction  between  an  action  based  on  a  rescission  and 
one  for  a  rescission  seems  to  be  obscured  or  lost  sight  of 
by  the  language  of  some  opinions. ' ' 30 

2*  Soper  v.  St.  Regis  Paper  Co.,  38  Misc.  294  (N.  Y.  1902)  ;  aff'd,  76  App.  Dlv. 
409  (N.  Y.  1902). 

2*  Mestler  v.  Jeffries,   145  Mich.  603   (1906).     See  also  §  310  supra. 
28  Hammond  v.  Pennock,  61  N.  Y.   152,   153   (1874). 

27  Whalen  v.   Stuart,    194  N.   Y.   503   (1909). 

28  Realty  Transfer  Co.   v.   Conn  Co.,   132  App.   Div.   286   (N.   Y.    1909). 

29  Citing  Vail  v.  Reynolds.  118  N.  Y.  297;  Berry  v.  A.  C.  Ins.  Co.,  132  N.  T.  49. 
*°  McGowan  v.   Blake,   134  App.  Dlv.   165,   1C6   (N.   Y.   1909). 


324  FRAUD. 

§  317.    Offer  to  Restore. 

While  generally  the  defrauded  party  must,  before  he 
can  maintain  an  action,  either  return  or  offer  to  return 
what  he  has  received  under  a  contract  before  he  may 
rescind  it  for  fraud,31  there  is  an  exception  to  this  rule 
where  the  defrauded  party  is  entitled,  in  any  event,  to  all 
that  he  has  received.  In  such  a  case  a  return  or  offer  to 
return  is  not  a  condition  precedent  to  the  bringing  of  an 
action.  It  is  sufficient  if  the  sum  retained  is  taken  into 
account  and  allowed  in  the  judgment.32  ' '  In  an  action  in 
equity,  brought  for  the  rescission  of  a  contract,  it  is  suffi- 
cient if  the  plaintiff  offer  in  his  complaint  to  return  what 
he  has  received,  and  make  a  tender  of  it  on  the  trial. ' ' 33 

§  318.    Pleading  Fraud. 

11  The  burden  of  charging  as  well  as  proving  fraud 
is  on  the  party  alleging  it,  and  facts  •  constituting  the 
alleged  fraud  must  set  forth  in  order  to  entitle  a  party 
to  introduce  evidence  of  it.  Mere  conclusions  of  law  are 
not  enough. " 34  "To  sustain  a  cause  of  action  to  recover 
damages  for  fraud,  the  plaintiff  must  allege  the  fraud 
and  resulting  damage,  but  when  fraud  and  damage  are 
both  alleged  there  is  a  cause  .of  action. " 35  ' '  Fraud  gives 
a  cause  of  action  for  the  damages  which  necessarily  re- 
sult from  the  wrong,  and  these  may  be  recovered  without 
an  averment  of  special  damage.  Such  damages,  however, 
as  are  the  material  but  not  the  necessary  result  of  the 
injury,  are  special  and  must  be  alleged. ' ' 36 

§  319.    Pleading  Fraud  Committed  by  More  than  One. 
The  principles  which  govern  an  action  for  fraud  and 

«Noyes  v.   Patrick,  58  N.   H.  618    (1879). 

M  Douglass  v.  Scott,  130  App.  Div.  322  (N.  Y.  1909)  ;  Bebeut  v.  Bodle,  38  Ohio  St. 
600  (1882). 

88  Cox  v.  Stillman,  132  App.  Div.  437  (N.  Y.  1909).  As  to  the  various  remedies  at 
law  and  in  equity,  see  §§  313-316  supra. 

»*Eppley  v.   Kennedy,   131   App.  Div.   4    (N.  Y.    1909). 

»  Isman  v.  Loring,   130  App.   Div.   847    (N.   Y.   1909). 

*•  Id.,  848. 


WAIVER.      RESCISSION.      REMEDIES.  325 

deceit  are  the  same  whether  the  fraud  is  alleged  to  have 
originated  in  a  conspiracy,  or  to  have  been  solely  com- 
mitted by  a  defendant  without  aid  or  cooperation. 

Whenever  it  becomes  necessary  to  prove  a  conspiracy 
in  order  to  connect  the  defendant  with  the  fraud,  no  aver- 
ment of  the  conspiracy  need  be  made  in  the  pleadings  to 
entitle  it  to  be  proved.37  An  allegation  of  conspiracy  need 
not  be  proved  but  may  be  wholly  disregarded  if  plaintiff 
can  show  otherwise  the  guilty  participation  of  any  de- 
fendant.38 

Where  a  conspiracy  is  established,  the  acts,  admis- 
sions and  declarations  of  any  one  of  the  conspirators, 
done  and  made  during  the  criminal  enterprise,  in  pursu- 
ance and  furtherance  thereof  and  in  reference  thereto 
may  be  proved.39  "Such  evidence  is  received  on  the 
theory  that  the  conspirators  have  jointly  assumed  to 
themselves  as  a  body,  the  attributes  of  individuality,  so 
far  as  regards  the  common  design,  thus  rendering  what- 
ever is  done  or  said  by  any  one  in  furtherance  of  that 
design,  a  part  of  the  res  gestce,  and  therefore  the  act  of 
all."40 

§  320.    Proof  of  Fraud  at  Law  and  in  Equity. 

The  question  may  arise  as  to  whether  the  fraud  requi- 
site as  a  basis  for  rescinding  a  contract  in  equity  is  of  the 
same  nature  as  that  demanded  in  a  court  of  law  in  an 
action  for  damages  for  deceit.  "  In  equity,  the  right  to 
relief  is  derived  from  the  suppression  or  misrepresenta- 
tion of  a  material  fact,  though  there  be  no  intent  to  de- 
fraud. This  view  has  been  applied  to  innocent  misrepre- 
sentations in  a  prospectus,  providing  that  they  were  of  the 

37  Rutlor  v.   Duke,  39  Misc.  243   (N.  Y.  1902). 

33  Brnckett  v.  Griswold,  112  N.  Y.  4G6,  407  (1889);  and  see  Hansen  v.  Kline,  113 
N.  W.  508  (Iowa  1907). 

38  On  the  general  subject  of  conspiracy,  see  Place  v.  Minster,  65  N.  Y.  95  (1875). 

40  N.  Y.  Guar.  &  Ind.  Co.  v.  Gleason,  78  N.  Y.  508  (1879)  ;  Page  v.  Parker,  43 
N.  H.  303  (1801)  ;  Wiggins  v.  Leonard,  9  Iowa  197  (1859). 


326  FRAUD. 

essence  of  the  contract.  This  doctrine  is,  substantially, 
grounded  in  fraud,  since  the  misrepresentation  operates 
as  a  surprise  and  imposition  upon  the  opposite  party  to 
the  contract.  It  is  inequitable  and  unconscientious  for  a 
party  to  insist  on  holding  the  benefit  of  a  contract  which 
he  has  obtained  through  misrepresentations,  however  in- 
nocently made. ' ' 41 

In  Jackson  v.  King,  4  Cow.  220  (N.  Y.  1825),  it  was 
suggested  that  courts  of  law  have  not,  in  all  cases  of 
fraud,  concurrent  jurisdiction  with  equity,  and  that  the 
distinction  between  legal  and  equitable  jurisdiction  upon 
fraud  is  that  at  law  it  must  be  proved,  not  presumed  as  it 
may  be  in  equity  from  the  nature  of  the  transaction  and 
the  situation  of  the  parties.42 


«  Hammond  v.  Pennock,  61  N.  Y.  152  (1874). 

42  See  also  Squlers  v.  Thompson,  73  App.  Div.  552  (N.  Y.  1902) ;  Lyon  v.  James,  97 
App.  Div.  385  (N.  Y.  1904)  ;  Bell  v.  James,  128  App.  Div.  241  (N.  Y.  1908)  ;  Johnson 
v.  Sheridan  Lumber  Co.,  93  Pac.  473  (Ore.  1908). 


CHAPTER  XXXIII. 
CRIMINAL  FRAUD. 

§  321.    General  Statement. 

In  New  York,  it  is  criminal  to  obtain  a  signature  by 
false  pretense  or  to  conspire  to  cheat  and  defraud  an- 
other out  of  property.  (§§  322-324.)  Also  to  corrupt  or 
to  enter  into  unlawful  agreements  with  agents.  (§  325.) 

The  New  York  statute  is  referred  to  in  this  chapter 
as  indicative  of  what  may  be  found  in  some  other  states. 

§  322.    Obtaining  Property  by  False  Pretenses. 

Under  the  New  York  statute,  "  A  person  who,  with  in- 
tent to  cheat  or  defraud  another,  designedly,  by  color  or 
aid  of  a  false  token  or  writing,  or  other  false  pretense, 
obtains  the  signature  of  any  person  to  a  written  instru- 
ment, is  punishable  by  imprisonment  in  a  state  prison  for 
not  more  than  three  years,  or  in  a  county  jail  for  not  more 
than  one  year,  or  by  a  fine  of  not  more  than  three  times 
the  value  of  the  money  or  property  affected  or  obtained 
thereby,  or  by  both  such  fine  and  imprisonment."1 
"  Where  an  intent  to  defraud  constitutes  a  part  of  a 
crime,  it  is  not  necessary  to  aver  or  prove  an  intent  to  de- 
fraud any  particular  person. ' ' 2 

§  323.    Compelling  Execution  of  Instrument. 

The  New  York  statute  also  provides  that  "The  com- 
pelling or  inducing  of  another,  by  such  force  or  threat,  to 
make,  subscribe,  seal,  execute,  alter  or  destroy  any  valu- 


N.   Y.   Penal  Law,   §  932. 

N.  Y.  Peual  Law,   §  3,  subd.  5. 


327 


328  FRAUD. 

able  security,  or  instrument  or  writing  affecting  or  intend- 
ing to  affect  any  cause  of  action  or  defense  or  any  prop- 
erty is  an  extortion  of  property  within  the  last  two  sec- 
tions."3 

' '  §  850.  Extortion  Defined.  Extortion  is  the  obtain- 
ing of  property  from  another,  with  his  consent,  induced 
by  a  wrongful  use  of  force  or  fear,  or  under  color  of  offi- 
cial right. 

"  §  851.  What  Threats  May  Constitute  Extortion. 
Fear,  such  as  will  constitute  extortion,  may  be  induced  by 
a  threat : 

1.  To  do  an  unlawful  injury  to  the  person  or  property 
of  the  individual  threatened,  or  to  any  relative  of  his  or 
to  any  member  of  his  family ;  or 

2.  To  accuse  him,  or  any  relative  of  his  or  any  member 
of  his  family,  of  any  crime ;  or, 

3.  To  expose,  or  impute  to  him,  or  any  of  them,  any 
deformity  or  disgrace ;  or, 

4.  To  expose  any  secret  affecting  him  or  any  of  them. 
"  §  852.    Punishment  of  Extortion.     A  person  who 

extorts  any  money  or  other  property  from  another,  under 
circumstances  not  amounting  to  robbery,  by  means  of 
force  or  a  threat  mentioned  in  the  last  two  sections, 
is  punishable  by  imprisonment  not  exceeding  fifteen 
years. ' ' 4 

§  324.    Definition  and  Punishment  of  Conspiracy. 

A  further  provision  of  the  New  York  statute  is  that 
1 1  if  two  or  more  persons  conspire  *  '  to  cheat  and  de- 
fraud another  out  of  property,  by  any  means  which  are  in 
themselves  criminal,  or  which,  if  executed,  would  amount 
to  a  cheat,  or  to  obtain  money  or  any  other  property  by 
false  pretenses,  *  *  each  of  them  is  guilty  of  a  mis- 
demeanor. " 5  '  *  No  agreement  except  to  commit  a  felony 

«  N.  Y.  Penal  Law,  §  853. 

4  N.  Y.  Penal  Law,  §§  850-852. 

•N.  Y.  Penal  Law,  §  580. 


CRIMINAL   FRAUD.  329 

upon  the  person  of  another,  or  to  commit  arson  or  bur- 
glary, amounts  to  a  conspiracy,  unless  some  act  beside 
such  agreement  be  done  to  effect  the  object  thereof,  by 
one  or  more  of  the  parties  to  such  agreement. ' ' 6 

§  325.    Corrupt    Influencing     of     Agents.      Unlawful 
Agreements  of  Agents. 

In  New  York  the  statute  also  provides  that  "  Who- 
ever gives,  offers  or  promises  to  an  agent,  employee  or 
servant,  any  gift  or  gratuity  whatever,  without  the  knowl- 
edge and  consent  of  the  principal,  employer  or  master  of 
such  agent,  employee  or  servant,  with  intent  to  influence 
his  action  in  relation  to  his  principal's,  employer's  or 
master 's  business ;  or  an  agent,  employee  or  servant,  who 
without  the  knowledge  and  consent  of  his  principal,  em- 
ployer or  master,  requests  or  accepts  a  gift  or  gratuity  or 
a  promise  to  make  a  gift  or  to  do  an  act  beneficial  to  him- 
self, under  an  agreement  or  with  an  understanding  that 
he  shall  act  in  any  particular  manner  to  his  principal's, 
employer's  or  master's  business;  or  an  agent,  employee 
or  servant  who,  being  authorized  to  procure  materials, 
supplies  or  other  articles  either  by  purchase  or  contract 
for  his  principal,  employer  or  master,  or  to  employ  ser- 
vice or  labor  for  his  principal,  employer  or  master,  re- 
ceives directly  or  indirectly,  for  himself  or  for  another, 
a  commission,  discount  or  bonus  from  the  person  who 
makes  such  sale  or  contract,  or  furnishes  such  materials, 
supplies  or  other  articles,  or  from  a  person  who  renders 
such  service  or  labor ;  and  any  person  who  gives  or  offers 
to  such  an  agent,  employee  or  servant  such  commission, 
discount  or  bonus  shall  be  guilty  of  a  misdemeanor  and 
shall  be  punished  by  a  fine  of  not  less  than  ten  dollars,  nor 
more  than  five  hundred  dollars,  or  by  such  fine  and  by  im- 
prisonment for  not  more  than  one  year. ' ' 7 

«  N.  Y.  Penal  Law,  §  583. 
i  N.  Y.  Penal  Law,  §  439. 


PART    V PROCEDURE. 


CHAPTER   XXXIV. 
PLEADING. 

§  326.    General  Statement. 

In  suing  for  broker's  commissions,  the  broker  has  the 
option  either  to  state  the  facts  constituting  the  cause  of 
action  or,  if  he  has  performed  his  part,  according  to  their 
legal  effect.  (§  329.) 

If  he  pleads  the  facts  constituting  his  cause  of  action, 
it  is  essential  to  set  forth  every  material  fact  which  forms 
a  part  of  the  cause  of  action.  (§§  329-333.) 

If  the  broker  alleges  performance,  evidence  excusing 
performance  is  held  by  some  authorities  not  admissible. 
(§  334.) 

Where  the  payment  of  commission  is  dependent  on 
some  special  agreement,  the  happening  of  the  condition 
precedent  should  be  alleged.  (§  335.) 

Abandonment  by  the  broker,  termination  of  his  em- 
ployment, and  bad  faith  on  the  part  of  the  broker  may 
all  be  considered  matters  of  defense.  (§  336.) 

Although  an  act  is  done  through  an  agent,  it  should 
be  alleged  as  done  by  the  principal,  leaving  the  method 
of  doing  it  to  the  proof .  (§337.) 

§  327.    Scope  of  Chapter. 

The  time  and  space  necessarily  required  for  a  satisfac- 
tory treatment  of  the  subject  of  pleading  is  so  great  that 

330 


PLEADING.  331 

the  present  chapter  can  but  give  a  general  idea  of  plead- 
ing in  brokers'  cases.  The  discussion  of  the  subject  is, 
as  a  whole,  based  on  the  so-called  ' '  reformed  procedure, ' ' 
though  here  and  there  an  authority  has  been  drawn  from 
a  state  where  the  common  law  form  of  pleading  still 
exists. 

The  essentials  of  pleading  are  the  same  under  most  of 
the  codes  of  the  various  states  in  which  code  pleading  is 
the  practice— with  the  possible  exception  of  Louisiana. 
Reference  will  therefore  be  made  to  but  a  single  code,  and 
as  New  York  was  the  first  state  to  adopt  the  reformed 
procedure,1  and  its  decisions  have  been  cited  so  freely  in 
other  states,  the  law  of  that  state  has  been  chosen,  and 
the  citations,  as  a  rule,  are  of  New  York  decisions. 

§  328.    Complaint  for  Broker's  Commissions. 

' '  There  is  only  one  form  of  civil  action.  The  distinc- 
tion between  actions  at  law  and  suits  in  equity,  and  the 
forms  of  those  actions  and  suits,  have  been  abolished."  2 
The  New  York  Court  of  Appeals  in  Sadler  v.  City  of  New 
York,  185  N.  Y.  414  (1906),  said:  "All  that  a  plaintiff  has 
to  do  in  any  case  is  to  set  forth  in  his  complaint  a  clear, 
concise,  and  unequivocal  statement  of  the  facts  consti- 
tuting his  cause  of  action,  and  a  demand  for  the  judgment 
to  which  he  supposes  himself  entitled. ' ' 

But  let  not  this  statement  disarm  the  practitioner.  It 
has  the  air  of  converting  the  art  of  pleading  into  a  de- 
lightful pastime.  Yet  pleading  is  a  technical  and  difficult 
art.  The  various  codes  were  intended  to  simplify  plead- 
ing, but,  notwithstanding  this,  we  must  frequently  look 
into  the  law  as  it  existed  long  before  the  time  of  these 
enactments  in  order  to  ascertain  the  meaning  of  the  codes. 
Often  the  impression  is  produced  on  the  practitioner's 

i  N.  Y.  Const,  of  1846. 

»N.  Y.  Code  Civ.  Pro.,  §  3339. 


332  PROCEDURE. 

mind  that  the  codes  have  not  made  things  so  simple  after 
all. 

§  329.    Methods  of  Pleading. 

In  most  cases  when  drawing  a  complaint  for  the  re- 
covery of  a  broker's  commissions,  either  of  two  methods 
may  be  adopted, — the  party  may,  at  his  option,  state  the 
facts  constituting  the  cause  of  action  as  they  actually 
existed  or  according  to  their  legal  effect.3 

Thus  a  complaint 4  alleged  that  the  defendant  was  in- 
debted to  the  plaintiff  in  the  sum  of  $591.18— a  balance 
due  from  the  defendant  for  work,  labor  and  services  in 
advertising  done  for  and  at  the  special  instance  and  re- 
quest of  the  defendant.  The  proof  showed  an  agreement 
between  the  parties  that  plaintiff  should  do  certain  ad- 
vertising for  the  defendant  and  be  paid  in  tickets  of 
the  defendant;  that  plaintiff  performed  the  work  and  re- 
ceived a  certain  quantity  of  the  tickets,  but  not  all  that 
he  should  have  received,  the  amount  stated  in  the  com- 
plaint being  still  due.  Plaintiff  demanded  the  balance  of 
the  tickets  from  the  defendant  but  was  refused.  Com- 
plaint sustained. 

Where  there  is  a  special  agreement,  and  the  plaintiff 
has  performed  his  part,  the  law  raises  a  duty  on  the  part 
of  the  defendant  to  pay  the  price  agreed  upon,  and  the 
plaintiff  may  rely  either  on  this  implied  assumpsit  or  on 
the  express  agreement.5 

§  330.    Pleading  Legal  Effect. 

From  what  has  been  said  in  the  preceding  section,  it 
seems  that  the  broker,  having  performed  his  part,  may 

*  N.    Y.    News    Pnb.    Co.    v.    Natl.    Steamship  Co..    148    N.    Y.    39    (1895),     (citing 
Bennett  v.   Judson,   21   N.   Y.  238    (1860);   Parron  v.    Sherwood.    17   N.    Y.   227    (1858); 
Barney  v.   Worthington,   37   N.   Y.    116    (1867)    ).  See  also  Hosley  v.    Black,    28   N.    Y. 
438  (1863). 

*  N.   Y.   News  Pnb.   Co.   v.   Natl.   Steamship   Co.,  supra. 
•Farron   v.    Sherwood,    17    N.    Y.    227    (1858). 


PLEADING.  333 

allege  that  the  defendant  is  indebted  to  him  in  a  stated 
sum  for  work,  labor  and  services  performed  at  the  special 
instance  and  request  of  such  defendant6  and,  in  New 
York  State,  at  least,  this  regardless  of  whether  the  orig- 
inal agreement  was  for  payment  in  money  or  in  prop- 
erty of  another  kind.  "  The  rule  in  this  state  seems  to 
be  that  where  a  party  agrees  to  pay  a  specific  sum,  *  *  * 
or  the  value  of  the  services  in  some  specific  articles  of 
property,  and  upon  demand  refuses  or  fails  to  deliver  the 
property,  his  obligation  is  thereby  converted  into  one  for 
the  payment  of  money. ' ' 7 

When  the  contract  of  employment  is  fully  performed 
and  nothing  remains  but  to  pay,  the  compensation  may 
be  recovered  on  the  common  counts.8  Thus  a  real  estate 
broker's  commission  that  has  been  fully  earned  under  an 
express  contract  may  be  recovered  under  the  common 
counts.9 

In  Leimbach  v.  Eegner,  70  N.  J.  L.  608  (1904),  non- 
suit was  entered  on  a  claim  for  commission,  the  contract 
of  employment  not  being  in  writing  as  required  by  the 
New  Jersey  statute  and  the  broker  having  sought  to  re- 
cover on  a  quantum  meruit.10 

§  331.    Pleading  the  Facts  Constituting  the  Cause  of 
Action. 

If  the  broker  prefers  to  plead  the  facts  as  they  ex- 
isted,11 he  may  do  so  but  must  observe  the  formalities. 
"  Under  our  Code  of  Civil  Procedure  a  complaint  must 
contain  a  plain  and  concise  statement  of  the  facts  consti- 
tuting each  cause  of  action,  without  unnecessary  repeti- 
tion. §  481,  subd.  2.  *  *  *  This  is  nothing  more  than  a 

«  See  cases  cited  under  preceding  section :  and  see  Form  47  infra,  Ch.  XLI. 

i  N.  Y.  News  Pub.  Co.  v.  Natl.  Steamship  Co.,  148  N.  Y.  39  (1895),  (citing  1 
Sedg.  on  Damages  (8th  Ed.).  §  280;  Gleason  v.  Pinney,  5  Cow.  (N.  Y.)  152;  Smith 
v  Smith.  2  Johns.  (N.  Y.)  235;  Brooks  v.  Hubhard,  3  Conn.  58. 

s  Menifee    v.    Higgins,    57    111.    50    (1870). 

»  Risley  v.   Reanmont,  71  N.  J.  L.  372   (1904). 

10  See  §  333  infra  as  to  necessity  of  pleading  that  broker's  authority  to  sell  was 
In  writing  where  statute  requires  writing. 

n  See  §  329  supra. 


334  PROCEDUKE. 

restatement  of  the  rule  as  it  existed  prior  to  the  adoption 
of  the  present  Code.  While  it  is  no  longer  necessary,  as 
it  was  under  the  old  system,  to  plead  the  conclusions  of 
law  which  followed  the  facts  previously  stated,  it  is  es- 
sential to  set  forth  every  material  fact  which  forms  a 
part  of  the  cause  of  action  or  defense." 12 

§  332.    Action  Based  Upon  a  Contract. 

"  Where  an  action  or  defense  is  based  upon  a  con- 
tract, the  pleading  in  which  it  is  set  forth  should  allege 
all  the  material  facts. " 13  A  consideration  is  essential  to 
all  contracts  not  under  seal,  except  so-called  "  contracts 
of  record."14  The  employment  of  a  broker  creates  a 
contract  of  brokerage  and  a  consideration  is  essential  to 
the  validity  thereof.  The  employer  gives  his  promise  of 
payment,  either  express  or  implied,  upon  the  perform- 
ance of  the  broker's  part  of  the  brokerage  contract.15 
In  other  words,  it  is  a  promise  for  an  act,  which  is  recog- 
nized as  a  consideration.16 

"  Consideration  is  a  material  and  indispensable  ele- 
ment of  every  contract.  '  In  declaring  upon  a  contract 
not  under  seal,  it  is  in  all  cases  necessary  to  state  that  it 
was  a  contract  that  imports  and  implies  consideration,  as 
a  bill  of  exchange  or  promissory  note,  or  expressly  to 
state  the  particular  consideration  upon  which  it  is 
founded.'  "17  "  *  Where  a  consideration  is  not  implied, 
or  a  request  is  essential  to  the  defendant's  liability, 
it  is  of  the  gist  of  the  action,  and  must  be  specially 
averred.'  "18 

"National  Citizens'  Bk.  v.  Toplltz,  178  N.  Y.  467,  468  (1904). 

"Clark    on    Contracts,    153. 

15  See  §  139  supra. 

19  Clark  on   Contracts,    165. 

"National  Citizens'  Bk.  v.  Toplltz,  178  N.  Y.  467  (1904),  (citing  1  Chltty  on 
Pleadings  (13th  Am.  Ed.).  292  and  cases  cited;  Moak's  Van  Santvoord's  Pleading.  164; 
Bliss  on  Code  Pleading  (2nd  Ed.),  §  268;  Beach  on  Modern  Law  of  Contracts,  Vol.  2, 
J  1691;  Bailey  v.  Freeman,  4  Johns.  (N.  Y.)  280;  Dolcher  v.  Fry,  37  Barb.  (N.  Y.) 

18  National  Citizens'  Bk.  v.  Toplltz,  supra,  (citing  Spear  v.  Downing,  34  Barb. 
(N.  Y.)  522;  Oould  on  Pleadings,  176).  As  to  promise  to  pay  commissions  which  are 


PLEADING.  335 

§  333.    Facts  to  be  Stated. 

Where  the  broker,  therefore,  attempts  to  set  forth  his 
cause  of  action  by  alleging  the  facts  as  they  existed,  he 
must  state  all  the  essential  facts,  which  are  at  least  these, 
—that  the  broker  performed  the  services  at  the  defend- 
ant's request,  express  or  implied,  or  was  employed  by  the 
principal,19  or  where  original  employment  is  wanting,  that 
his  acts  were  ratified  by  the  principal ; 20  that  he  was  the 
procuring  cause  of  the  sale,  i.  e.,  under  the  prevailing 
rule,21  procured  a  buyer,  ready,  willing  and  able  22  to  pur- 
chase on  the  employer's  terms,23  or  procured  an  enforce- 
able contract  of  sale ; 24  and  the  agreed  or  customary 
amount  of  the  commissions,25  or  the  reasonable  value  of 
the  services,26  and  non-payment  thereof. 

While  it  is  customary  to  allege  demand  and  non-pay- 
ment, it  is  not  essential  to  allege  a  demand,  and,  were  it 
necessary,  the  bringing  of  the  action  is  a  sufficient  de- 
mand 27  and  the  failure  to  make  a  previous  demand 
would  affect  only  the  question  of  interest  and  probably 
costs.28 

held  to  be  without  consideration  and  unenforceable,  see  §§  121,  205.  And  see  §§  208-210. 
The  consideration  must  be  legal.  Therefore,  a  promise  to  pay  commission  if  the 
broker  will  commit  a  fraud  upon  his  employer  in  bringing  about  a  deal  is  unenforceable. 
See  §§  140-145.  209  supra;  also  Clark  on  Contracts,  pp.  441,  442. 

i»  See  Chs.  IX,  X.  supra;  8  Ency.  of  PI.  &  Pr.  833;  19  Cyc.  274.  An  allegation 
of  employment  should  be  incorporated  in  the  complaint,  followed  by  sufficient  averments 
of  a  compliance  with  the  contract  of  employment.  Yoder  v.  Randol,  83  Pac.  537  (Okla. 
1905)  ;  3  L.  R.  A.  (N.  S. )  576.  Under  an  allegation  that  the  broker  was  employed  by 
a  person  who  "was  the  owner  of  and  had  charge  and  control"  of  the  land,  the  broker 
need  not  prove  that  such  person  owned  the  record  title.  Cook  v.  Piatt,  104  S.  W.  1133 ; 
126  Mo.  App.  553  (1907). 

a>  See    §§    109-112    supra. 

ai  See  §§   117-119   supra. 

*'•>  Where  the  purchaser  is  accepted  by  the  principal,  the  purchaser's  financial  ability 
is  no  part  of  the  broker's  affirmative  case.  See  §§  153-155  supra. 

28  The  complaint  should  allege  that  the  broker  sold  the  property  or  that  he  pro- 
cured a  purchaser  who  was  ready,  able  and  willing  to  consummate  the  sale  upon  the 
specified  terms.  8  Eucy.  of  PI.  &  Pr..  832. 

2*  In  some  jurisdictions,  it  is  held  that  the  broker's  obligation  is  performed  when 
he  produces  a  purchaser  ready,  willing  and  able  to  purchase  on  the  principal's  terms, 
while  in  other  jurisdictions  the  broker  Is  required  to  bring  about  an  enforceable  con- 
tract of  sale.  The  conflicting  views  have  been  referred  to  in  several  preceding  chapters, 
and  principally  in  §§  117-119  supra. 

28  See  §§  211-226  supra.  That  the  defendant  had  knowledge  of  a  custom  need  not 
be  pleaded.  Whitehouse  v.  Moore,  13  Abb.  Pr.  142  (N.  Y.  1861).  See  §  225  supra  as 
to  pleading  rules  of  a  board  of  brokers. 

*•  See   §   226   supra. 

27  Maguire   v.    Durant.    1    Misc.    509    (N.    Y.    1892). 

28  De  Carricarti   v.    Blanco,    121    N.   Y.    230    (1890);   Sweeny  v.   City  of  New   York, 
173   N.    Y.    414    (1903).     And  see   as   to  necessity  of  demand   when  plaintiff   pleads   the 
legal  effect,    §   330   xuiira. 


336  PROCEDURE. 

As  to  alleging  non-payment,  it  may  be  said  that  what- 
ever may  be  the  law,  it  is  better  practice  to  allege  non- 
payment as  it  is  a.  simple  matter  to  prove  prima  facie  in 
a  broker's  case.  There  are  occasions,  however,  where  the 
question  may  become  of  importance,  as  for  instance,  in 
an  action  to  recover  broker's  commissions  where  one  of 
the  parties  has  died  and  the  survivor  is  disqualified  from 
testifying. 

The  law  is  in  some  confusion  on  the  general  proposi- 
tion of  alleging  and  proving  payment.  In  an  action  upon 
contract  for  the  payment  of  money  only,  the  allegation 
and  proof  of  the  promise  and  of  the  fact  that  it  has  ma- 
tured, creates  the  presumption  of  non-payment  and 
throws  the  burden  of  proving  payment  upon  the  one  who 
asserts  it.29 

Where  the  statute  requires  the  broker's  authority  to 
be  in  writing,  some  cases  hold  that  the  complaint  must 
allege  written  authority.30  In  New  Jersey,  where  the 
statute  declares  that  no  broker  or  real  estate  agent 
selling  or  exchanging  land  shall  be  entitled  to  com- 
mission unless  his  authority  is  in  writing  signed  by 
the  owner  or  his  agent,  and  the  rate  of  commission 
is  stated,31  it  has  been  held  that  the  broker  is  not 
obliged  to  set  out  in  his  pleading  that  his  authority 
was  in  writing,  and  that,  so  far  as  the  declaration  is 
concerned,  since  the  right  to  bring  an  action  for  ser- 
vices in  negotiating  the  sale  of  property  was  not 
created  by  this  statute,  but  existed  at  common  law, 
and  since  the  statute  only  requires  that  evidence  of  the 
request  and  authorization  must  be  in  writing  and  the  rate 

»Conkling  v.  Weatherwax,  181  N.  T.  258  (1905).  in  which  note  the  views  of  the 
Judges  of  the  N.  Y.  Court  of  Appeals  expressed  in  separate  opinions  and  memoranda ; 
see  also  the  cases  there  cited.  Other  cases  bearing  on  the  point  are:  Lent  v.  N.  Y.  etc. 
R.  R.  Co.,  130  N.  Y.  504  (1892)  ;  Crawford  v.  Tyng.  10  Misc.  143  (N.  Y.  1894)  ; 
Cochran  v.  Reich,  91  Hun  440  (N.  Y.  1895)  ;  Grnenstein  v.  Jablowsky,  1  App.  Div. 
580  (N.  Y.  1896)  ;  Dry  Dock  R.  R.  Co.  v.  N.  &  E.  R.  R.,  3  Misc.  61  (N.  Y.  1893)  ; 
Hauxhurst  v.  Ritch,  119  N.  Y.  621  (1890);  Edson  v.  Dillage.  8  How.  Pr.  273  (N.  Y. 
1853)  ;  Fitzmahony  v.  Caulfleld,  25  App.  Div.  119  (N.  Y.  1898). 

*>  Covey  v.  Henry,  71  Neb.  118  (1904).  See  also  Leimbach  v.  Regner,  70  N.  J.  L. 
80S  (1904). 

«  See   §    16  supra. 


PLEADING.  337 

of  compensation  be  fixed  by  the  writing,  the  law  would 
presume  that  the  contract  declared  on,  if  required  to  be 
in  writing  by  the  statute,  was  in  writing.  In  other  words, 
that  the  statute  introduces  a  new  rule  of  evidence,  and 
does  not  alter  or  affect  the  rule  of  pleading.32 

§  334.    Full  Performance  and  Excuse  for  Performance. 

Under  a  complaint  setting  out  a  contract  and  aver- 
ring its  performance  by  the  plaintiff,  evidence  in  excuse 
for  non-performance  has  been  held  not  admissible.33 

But  in  Hosley  v.  Black,  28  N.  Y.  443  (1863),  it  is  said, 
"  this  rule  is  of  very  little  consequence;  for  the  plaintiff 
may  amend  his  complaint  and  then  give  the  evidence." 
In  a  case 34  where  the  defendant  made  no  objection  to  the 
proof,  the  court  said  that  as  the  plaintiff  did  not  move  to 
amend  it  was  in  the  discretion  of  the  court,  even  after  the 
close  of  plaintiff's  case,  to  entertain  the  motion  to  dis- 
miss because  performance  was  alleged  and  excuse  for 
performance  was  attempted  to  be  proved. 

If  a  waiver  of  performance  is  relied  upon,  it  must  be 
pleaded.  A  plaintiff  cannot  allege  performance  and 
when  the  same  is  denied  change  front  on  the  trial,  and 
establish  facts  excusing  performance.35  * '  Where  a  com- 
plaint by  a  broker,  employed  to  find  a  purchaser  or  a 
lender,  does  not  allege  that  the  transaction  was  consum- 
mated, it  must  allege  that  plaintiff  notified  defendant 
that  a  customer  was  found."36  A  mere  allegation  that 
"  because  of  the  default  of  the  defendant  "  the  contract 
was  not  carried  out,  is  insufficient.  Facts  should  be 
stated.37 

32  Adams  v.  Grady,  72  Atl.  55  (N.  J.  1909),  (citing  1  Chltty  on  Pleading,  marg.  p. 
222  and  New  Jersey  cases).  See  also  §  330  supra. 

s»  Hosley  v.  Black,  28  N.  Y.  443  (1863)  ;  Stone  v.  Goodsteln,  49  Misc.  482  (N.  Y. 
1906).  And  see  §  194  supra. 

>*  Weeks   v.    O'Brien,    141    N.    Y.    204    (1894). 

35  Williams  v.  Fire  Assn.  of  Pa.,   119  App.  Dlv.  573   (N.  Y.   1907). 

«  19  Cyc.    275. 

"Dayls  v.  SilTerman,  98  App.   Div.  305   (N.  Y.   1904). 


338  PROCEDURE. 

But  it  has  been  held  that  where  the  principal  is  un- 
able or  refuses  to  make  the  trade,  the  broker  may  sue  for 
commission?8  And  where  the  cause  of  action  was  for 
procuring  a  sale,  and  the  sale  was  prevented  by  the  ven- 
dor, it  has  been  held  that  the  broker  could  recover  as  for 
a  complete  sale.39 

Where  the  owner  induces  the  real  purchaser  to  take 
title  in  the  name  of  another  person  in  order  to  keep  the 
broker  in  ignorance  of  the  fact  that  the  sale  had  been 
made  to  the  purchaser  presented  by  the  broker,  the  bro- 
ker's complaint  should  not  be  dismissed  on  the  ground 
that  the  evidence  established  a  cause  of  action  for  fraud. 
Under  such  circumstances  the  broker  may  recover  on  an 
allegation  of  performance.40 

§  335.    Pleading  Special  Agreements. 

Where  the  commission  is  to  be  paid  out  of  the  final 
payment  received  by  the  vendor,  the  broker  must  allege 
as  a  condition  precedent  that  the  vendor  received  the 
final  payment.  An  allegation  that  the  sum  "  became 
due  "on  a  given  date  is  not  equivalent  to  an  allegation 
of  the  happening  of  the  condition  precedent.41 

Where  it  was  agreed  that  the  broker  should  have 
commissions  if  he  furnished  a  purchaser  at  a  fixed  price, 
he  is  not  entitled  to  compensation  under  the  agreement 
for  furnishing  a  purchaser  at  a  less  price.  In  such  a 
case,  the  broker  cannot  recover  proportionate  commis- 
sions on  the  lesser  sum,  or  what  his  services  were  reason- 
ably worth,  when  he  did  not  declare  on  a  quantum 
meruit.42 

In  Morton  v.  Petit,  133  App.  Div.  377  (N.  Y.  1909),  the 

"Cadigan   v.    Crabtree.    179   Mass.    481    (1901). 
»  Rice-Dwyer  R.  E.  Co.  v.  Ruhlman.  68  Mo.  App.  506   (1896). 
40  Martin  v.  Fegan,  95  App.  Dlv.   154   (N.  Y.   1904). 

« Nekarda  v.  Presberger,  123  App.  Div.  418  (N.  Y.  1908).  And  see  §§  228 
et  teq.,  230-234  supra. 

42  Steinfelil  v.  Storm,  31  Misc.  167  (N.  Y.  1900). 


PLEADING.  339 

complaint  alleged  that  the  broker  was  employed  "  to  pro- 
cure *  *  an  acceptance  of  a  certain  application  made 
by  defendant  for  a  loan,"  and  that  the  broker  "  procured 
one  *  *  *  to  accept  said  application."  The  complaint 
was  demurred  to  upon  the  ground  that  there  was  no  alle- 
gation that  the  broker  ever  communicated  to  or  notified 
the  defendant  that  he  had  procured  a  person  ready,  able 
and  willing  to  consummate  the  loan,  but  the  complaint 
was,  nevertheless,  held  sufficient.  In  McLaughlin  v. 
Whiton,37  Misc.  838  (N.Y.  1902),  it  was  held  that  an  alle- 
gation that  the  broker  was  to  procure  a  loan  is  not  estab- 
lished by  proving  that  he  produced  a  person  ready,  pre- 
pared and  willing  to  make  the  loan.  Where  the  contract 
is  to  procure  a  loan,  it  should  appear  that  it  was  actually 
secured;  the  right  of  action  depending  upon  a  condition 
precedent,  performance  should  be  averred.43 

§  336.    Matters  of  Defense. 

Under  a  general  denial  a  defendant  may  offer  evidence 
to  show  that  the  contract  actually  made  was  another 
than  that  pleaded  in  the  complaint.  Thus,  where  the  com- 
plaint alleges  that  the  broker  brought  about  an  absolute 
sale,  the  principal  may,  under  a  general  denial,  show  that 
the  broker  secured  a  person  who  took  an  option  only.44 

Evidence  of  gross  misconduct,  fraud  or  negligence  on 
the  part  of  the  broker  has  been  held  admissible  where 
only  the  general  issue  was  pleaded.45  On  the  other  hand, 
an  abandonment  of  the  employment  by  the  broker  as  well 
as  an  express  termination  of  the  employment,  have  been 
held  to  be  matters  of  defense  and  do  not  have  to  be  nega- 
tived by  the  plaintiff  in  the  course  of  his  proof  to  support 
a  cause  of  action  for  commission.46  And  that  the  broker 

« McLaughlin   v.    Whiton,    37   Misc.    838    (N.    Y.    1902). 
"Brown   v.   Wisner,    51    Wash.    509;   99   Pac.    581    (1909). 
«8   Ency.    of  PI.   &   Pr.,   836. 
*»  Moore  v.   Boehm,  45  Misc.  622   (N.  Y.   1904). 


340  PROCEDTIKE. 

did  not  act  in  good  faith  has  also  been  held  to  be  matter 
of  defense.47 

An  agent  cannot  be  interested  in  the  profit  of  a  sale  to 
his  principal,  and  even  though  a  person  is  not  a  party  to 
an  agreement  to  share  the  profit,  he  becomes  liable  to 
account  under  an  allegation  that  he  received  and  kept  a 
share  of  the  profit.48 

§  337.    Pleading  Acts  Done  by  Agent. 

Although  an  act  is  done  through  an  agent,  it  should 
be  alleged  as  done  by  the  principal,  leaving  the  method 
of  doing  it  to  the  proof.49  Where  false  representations 
are  made  through  an  agent  and  the  principal  is  sued,  it 
is  unnecessary  to  allege  any  agency  in  the  making  of  the 
representations.  A  simple  allegation  that  they  were 
made  by  the  defendant  is  appropriate.50 

47  See  §   141   supra. 

« Colonizers  Realty  Co.  v.  Shatzkin,  129  App.  Dlv.  609  (N.  Y.  1909).  See  also 
§5  142-145,  252-257  supra.  As  to  whether  the  defendant  may  show,  under  a  general 
denial,  that  the  broker  had  agreed  for  commissions  from  both  sides  without  the  knowl- 
edge of  the  defendant,  or  whether  it  must  be  alleged  as  a  defense,  see  §  58  supra. 

49  Moflfett  v.   Jaffe,    132  App.   Div.  7   (N.   Y.    1909). 

""Barlow   v.   Halnes,   63  Misc.   98   (N.   Y.    1909). 


CHAPTER  XXXV. 
INTERPLEADER. 

§  338.    General  Statement. 

When  two  or  more  brokers  are  employed  on  the  same 
property,  the  circumstances  may  be  such  that  both  bro- 
kers claim  the  commission  and  the  owner  be  unable  to 
determine  which  of  the  two  was  the  procuring  cause  of 
the  sale.  (§339.) 

A  bill  of  strict  interpleader  is  one  in  which  the  com- 
plainant asserts  his  possession  of  something  in  which  he 
claims  no  personal  interest,  but  in  which  other  persons 
whom  he  makes  defendants  set  up  conflicting  claims  and 
the  complainant  cannot  safely  determine  to  which  he  shall 
yield.  (§  340.) 

Interpleader  has  been  held  proper  where  two  brokers 
claim  commission  on  the  same  sale  (§  341)  but  even  in 
such  circumstances  the  right  to  interplead  is  not  univer- 
sally recognized.  (§  342.) 

The  procedure  with  respect  to  interpleader  is  in  most 
places  regulated  by  statute.  (§  343.) 

When  two  brokers  claim  the  same  commission  and  one 
sues  in  a  court  without  jurisdiction  to  accord  the  right  of 
interpleader,  the  vendor  may  bring  an  action  of  inter- 
pleader in  another  court  having  jurisdiction.  (§  344.) 

Sufficient  grounds  for  interpleader  must  be  shown. 
(§  345.)  Interpleader  makes  actions  at  law  equity  suits. 
(§  346.) 

§  339.    Double  Claims  for  Commission. 

That  the  principal  may  employ  as-many  different  bro- 

341 


342  PROCEDURE. 

kers  as  he  pleases  to  sell  his  property,  and  is  liable  for 
commissions  only  to  that  broker  who  is  the  procuring 
cause  of  the  sale,  has  already  been  discussed.1  Under 
such  circumstances  it  not  infrequently  occurs  that  two 
different  brokers  claim  to  have  been  the  inducing  cause  in 
the  same  sale  and  each  claims  the  commission. 

The  existence  of  such  complications  is  mainly  due  to 
the  purchaser's  efforts  to  secure  the  property  on  the  best 
possible  terms.  A  prospective  purchaser  may  be  shown 
the  property  by  a  broker  and  learn  from  him  the  terms  of 
sale.  The  broker  may  or  may  not  report  the  pending  ne- 
gotiations to  his  principal.  Even  if  he  informs  the  prin- 
cipal of  the  negotiations,  he  rarely,  at  this  stage,  discloses 
who  the  proposed  purchaser  is,  for  fear  the  principal  may 
be  tempted  to  deal  direct. 

Meanwhile  the  proposed  purchaser,  looking  for  other 
property,  comes  into  contact  with  other  brokers  in  the 
same  vicinity,  and  is  perhaps  shown  the  same  property 
which  the  first  broker  has  already  shown  him.  In  many 
cases  the  prospective  purchaser  does  not  disclose  to  this 
second  broker  the  fact  that  another  broker  has  already 
shown  him  the  property,  but  gets  the  best  terms  he  can 
from  the  second  broker,  who,  in  his  turn,  fails  to  dis- 
close the  name  of  the  prospective  purchaser  to  the 
principal. 

Sometimes  the  purchaser  deals  at  once  with  the  second 
broker  if  this  latter  holds  out  any  hope  of  obtaining  the 
property  on  more  favorable  terms.  Sometimes,  however, 
the  purchaser  returns  to  the  first  broker,  either  because 
the  first  broker  held  out  better  hopes  or  because  the  pur- 
chaser desires  to  inform  this  first  broker  that  he,  the  pur- 
chaser, has  been  offered  the  property  under  more  favor- 
able terms.  He  does  this  expecting  the  first  broker  to  do 
even  better  for  him. 

The  contest  is  then  on.    The  principal  is  besieged  by 

*  See  §§   97,   98,   237  supra. 


INTERPLEADER.  343 

both  brokers,  and,  not  knowing  that  both  have  the  same 
buyer,  imagines  that  two  prospective  purchasers  are  all 
at  once  very  anxious  for  his  property.  This  sometimes 
makes  him  quite  independent. 

When  a  sale  is  finally  brought  about,  the  principal 
finds  that  he  has  on  his  hands  a  difficult  proposition.  He 
does  not  want  to  pay  two  commissions  for  the  one  sale. 
If,  however,  he  undertakes  to  determine  the  question  and 
pays  the  commission  to  the  broker  whom  he  decides  to 
have  been  the  procuring  cause  of  the  sale,  a  court  or  a 
jury  may  subsequently,  on  the  suit  of  the  other  broker, 
decide  that  his  decision  was  in  error,  and  then  the  prin- 
cipal, though  wholly  innocent  of  any  wrong,  is  obliged  to 
pay  the  judgment  obtained  by  the  second  broker  or  take 
an  expensive  appeal. 

Even  if  he  takes  the  second  course  he  would  un- 
doubtedly be  informed  by  the  appellate  tribunal  that 
while  it  deplores  a  situation  which  subjects  the  principal 
to  double  payment,  yet  the  whole  matter  was  a  question 
of  fact,  and  as  there  was  evidence  upon  which  the  jury 
could  have  reached  the  verdict  it  rendered,  the  appellate 
court  did  not  feel  inclined  to  disturb  the  verdict. 

The  principal  may  go  still  further  and  ask  the  first 
broker  to  whom  he  voluntarily  paid  the  commission,  to 
return  it.  The  first  broker  replies  that  he  feels  that  he 
earned  the  commission,  and  adds  that  as  he  was  not  a 
party  to  the  litigation  already  had,  he  was  not  given  an 
opportunity  to  show  in  court  that  he  had  earned  the  com- 
mission. The  principal  may  now  sue  the  first  broker. 
The  result  is  not  always  certain.  The  first  broker  may 
even  be  successful  in  establishing  before  another  court  or 
jury  that  he  is  the  party  who  is  actually  entitled  to  retain 
the  money. 

When  the  principal  has  thus  dragged  himself  through 
the  court  proceedings,  he  finds  that  it  has  cost  him  two 
commissions,  and  in  addition,  several  times  the  amount  of 


344  PROCEDUBE. 

an  ordinary  commission  in  the  cost  of  the  litigation,  and 
that  he  is  worse  off  than  if  he  had  voluntarily  paid  both 
commissions  in  the  beginning. 

In  such  circumstances,  may  the  principal  avoid  all 
this  expense  and  trouble  by  resorting  to  the  remedy 
known  as  interpleader? 


§  340.    Nature  of  Interpleader. 

"A  bill  of  strict  interpleader  is  one  in  which  the  com- 
plainant asserts  his  possession  of  some  fund  or  something 
in  which  he  claims  no  personal  interest,  but  in  which 
other  persons  whom  he  makes  defendants  set  up  conflict- 
ing claims,  and  the  complainant  cannot  safely  determine 
to  which  claim  he  should  yield. "  2  No  attempt  will  be 
made  to  enter  into  details  concerning  the  derivation  and 
particular  nature  of  interpleader,  nor  whether  inter- 
pleader exists  in  common  law  actions  only  by  virtue  of 
statute  or  not,  as  our  object  is  to  confine  ourselves  as 
closely  as  may  be  to  the  subject  of  interpleader  in  rela- 
tion to  double  claims  for  the  same  commission. 

The  question  may  arise  in  three  ways:  (1)  where  both 
brokers  bring  separate  actions  for  the  same  commission, 
and  the  principal  asks  that  the  actions  be  joined,  as  it 
were,  into  one,  and  that  he  may  drop  out  of  both  upon 
paying  the  commission  into  court,  and  leave  the  bro- 
kers to  fight  it  out  between  them,  or  that  he,  the  principal, 
may  be  compelled  to  contest  but  one  suit;  (2)  where  one 
of  the  brokers  brings  suit  and  the  principal  asks  that  the 
other  broker,  who  also  makes  claim,  be  joined  with  or 
substituted  for  the  principal  in  the  suit;  (3)  where  neither 
broker  brings  suit,  but  both  make  claim,  and  the  princi- 
pal takes  the  initiative  and  brings  suit  against  both  bro- 
kers to  determine  the  conflict. 

*  Metropolitan  Lite  Ins.  Oo.   v.   Hamilton,   70  Atl.  677   (N.  J.   1908) 


INTERPLEADER.  345 

§  341.  Interpleader  Permissible  in  Broker's  Commis- 
sion Cases  in  Some  States. 

In  New  York  there  have  been  cases  which  held  that 
the  right  to  interplead  in  brokers'  commission  suits  did 
not  exist,3  but  the  right  to  interplead  adverse  claimants 
to  a  brokerage  commission  on  the  sale  of  realty  is  now 
recognized  there.4  Where  there  is  no  pretense  or  sugges- 
tion that  the  owner  has  rendered  himself  liable  to  double 
commissions,  and  he  concedes  his  liability  to  one  or  the 
other  of  the  claimants,  but  is  unable  to  determine  between 
them  and  is  unwilling  to  do  so  at  his  own  risk,  the  owner 
may  pay  the  money  into  court  and  interplead  the  rival 
claimants.5 

And  in  Eogers  v.  Picken  Realty  Co.,  55  Misc.  199  (N. 
Y.  1907),  where  two  brokers  claimed  commission  on  the 
same  sale,  interpleader  was  held  proper,  the  court  distin- 
guishing other  cases  in  which  each  claim  was  based  on  a 
separate  contract.  Here  it  was  held  that  where  there  is 
in  the  hands  of  a  defendant  money  which  belongs  to  the 
plaintiff  or  a  third  person,  and  is  claimed  by  both  of  them, 
and  the  holder  of  the  fund  has  no  interest  in  the  subject 
matter,  and  the  question  to  be  determined  is  the  title  to 
the  particular  fund  in  respect  to  which  the  claims  are 
made,  an  order  substituting  the  second  claimant  in  place 
of  the  original  defendant  may  be  made.  And  in  Pennsyl- 
vania interpleader  has  been  granted  to  determine  conflict- 
ing claims  to  the  same  brokerage  commission.6 

§  342.    Interpleader    Not    a    Universally    Recognized 
Right. 

The  subject  of  interpleader  is  not,  however,  free  from 
doubt.  A  typical  and  at  the  same  time  a  recent  case  which 

*  Cohen    v.    Cohen,    35    Misc.    206    (N.    Y.    1901);    Olsen    T.    Moran,    50   Misc.    655 
(N.    Y.    1906). 

*  Dardonvllle  v.    Smith,    133   App.   Div.   234    (N.    Y.    1909). 
•Trembley  v.    Marshall,    118   App.    Div.   839    (N.   Y.    1907). 
8  Brooke  T.    Smith,    13   Pa.    Co.    Ct.   557    (1893). 


346  PROCEDURE. 

presents  the  question  as  it  very  frequently  arises  is  that  of 
Maxwell  v.  Frazier,  96  Pac.  548  (Ore.  1908).  Maxwell 
engaged  Frazier,  a  real  estate  broker,  to  sell  his  property 
for  hun  at  a  fixed  price  and  for  a  commission  of  $50.  At 
the  same  time  Maxwell,  as  he  had  a  right  to  do,7  engaged 
Hurst  also  to  sell  the  property.  Hurst  claimed  that  his 
commission  was  not  fixed  in  advance,  but  that  he  was  to 
receive  the  reasonable  value  of  his  services. 

Presently  Maxwell  sold  the  property  to  one  Corby, 
and  being  unable  to  determine  whether  Frazier  or  Hurst 
was  the  procuring  cause  of  the  sale,  came  into  Court,  ad- 
mitting that  he  owed  $50  commission  either  to  Frazier  or 
to  Hurst  for  procuring  the  purchaser,  but  alleging  that 
they  both  claimed  it  and  were  threatening  to  bring  action 
against  him  therefor  and  that  he  was  unable  to  decide, 
without  hazard  to  himself,  to  which  it  belonged. 

Maxwell  brought  this  interpleader  suit  without  collu- 
sion with  either  Frazier  or  Hurst,  and  tendered  the  sum 
of  $50  into  court  for  the  benefit  of  the  successful  claimant. 
One  of  the  brokers  contended  that  the  case  was  not  a 
proper  one  for  interpleader.  The  court  in  upholding  this 
contention  said:  "  '  It  is  essential  to  the  right  to  file  the 
bill  that  there  be  two  or  more  claimants  to  the  fund  in 
dispute,  capable  of  interpleading  and  settling  the  matter 
between  themselves.'8  The  issues  must  be  between  the 
defendants  as  to  their  right  to  the  same  specific  thing  or 
fund,  and  not  an  issue  with  the  plaintiff  as  to  separate 
claims  against  him.  Mr.  Justice  Wolverton  in  North  Pac. 
Lbr.  Co.  v.  Lang,  28  Or.  246,  258;  42  Pac.  799,  803;  52  Am. 
St.  Rep.  780,  in  discussing  this  remedy  and  when  it  may 
be  invoked,  says:  '  One  of  the  essential  requisites  to 
equitable  relief  by  bill  of  interpleader  is  that  all  the  ad- 
verse titles  of  the  respective  claimants  must  be  connected 
or  dependent  or  one  derived  from  the  other  or  from  a 

»See   §§   97,   98,    237  swpra. 
•  Citing  23  Cyc.  5. 


INTERPLEADER.  347 

common  source.  There  must  be  privity  of  some  sort  be- 
tween all  the  parties,  such  as  privity  of  estate,  title  or 
contract,  and  the  claims  should  be  of  the  same  nature  and 
character.  In  cases  of  adverse  independent  titles  or  de- 
mands, actions  to  determine  the  rights  of  litigants  must 
be  directed  against  the  party  holding  the  property,  and 
he  must  defend  as  best  he  can  at  law.  *  *  *  Thus,  where 
the  only  relation  which  the  plaintiff  sustains  to  the  de- 
fendants is  that  he  is  the  debtor  of  one  of  them,  he  cannot 
invoke  the  aid  of  an  interpleader.'  To  the  same  effect  is 
23  Cyc.  3-8.  In  the  case  before  us,  each  of  the  defendants 
relies  upon  a  separate  contract  with  the  plaintiff.  There 
is  no  privity  between  them,  but  they  are  claiming  on  in- 
dependent demands.  Neither  defendant  is  claiming  the 
commission  through  any  privity  with  the  other.  The 
plaintiff  is  not  a  stakeholder,  but  his  liability  to  each  of 
the  defendants,  if  liable  at  all,  is  upon  a  personal  contract, 
and  the  bill  will  not  be  entertained  to  try  out  a  mere  legal 
liability  of  the  plaintiff  to  a  defendant.  Such  is  not  the 
province  of  a  bill  of  interpleader.  The  creditor  is  entitled 
to  his  remedy  at  law.  A  parallel  case  to  the  one  at  bar  is 
Sachsel  v.  Farrar,  35  111.  App.  277.  The  vendor  of  real 
estate  filed  a  bill  requiring  two  real  estate  agents  to  in- 
terplead  as  to  which  was  entitled  to  commissions  for  the 
sale,  and  it  is  held  that  as  their  claims  were  upon  hide- 
pendent  contracts  with  the  vendor,  and  not  by  title 
derived  by  one  from  the  other,  the  vendor  must  make  the 
best  defense  he  can  at  law,  and  interpleader  will  not  lie. 
In  (First  Natl.)  Bank  v.  Bininger,  26  N.  J.  Eq.  345,  it  was 
held  that  the  true  doctrine  is  that  in  cases  of  adverse 
independent  titles,  the  party  holding  the  property  must 
defend  himself  at  law  as  best  he  can.  Hoyt  v.  Gouge,  125 
Iowa  603;  101  N.  W.  464,  which  is  also  a  suit  to  require 
real  estate  brokers  to  interplead,is  to  the  same  effect.  Also 
see  (Third  Natl.)  Bank  v.  Skillings  Lbr.  Co.,  132  Mass.  410. 
Therefore  the  case  was  not  a  proper  one  for  interpleader. 


348  PROCEDURE. 

Where  a  bill  of  interpleader  is  filed,  the  practice  is  first 
to  determine  whether  such  a  bill  will  lie.  If  it  will  not,  it 
is  useless  to  go  further.  If  it  will,  then,  upon  bringing  the 
property  in  dispute  into  court,  the  complainant  is  dis- 
charged from  further  liability  with  his  costs  to  be  paid 
out  of  the  deposit,  and  issues  cannot  be  made  against  him 
except  as  to  whether  the  case  is  a  proper  one  for  inter- 
pleader. But  the  court  will  require  the  defendants  to  in- 
terplead  and  litigate  their  respective  rights  to  the  fund 
in  dispute. ' ' 9 

§  343.    Method  of  Procedure. 

The  procedure  with  respect  to  interpleader  is,  in  many 
states,  regulated  by  statute.  Among  the  states  which 
regulate  the  matter  by  statutory  provision  are  New 
York,10  Massachusetts,11  Ohio,12  California,13  Delaware,14 
Connecticut,15  Oregon,16  and  Georgia.17  New  York  has 
very  explicit  statutory  provisions,  which  are  presented 
here  for  illustrative  purposes. 

Section  820  of  the  New  York  Code  of  Civil  Procedure, 
providing  for  interpleader  in  a  contract  action  which  is 
pending,  is  as  follows:  "A  defendant  against  whom  an 
action  to  recover  upon  a  contract  or  an  action  of  eject- 
ment, or  an  action  to  recover  a  chattel  is  pending,  may,  at 
any  time  before  answer,  upon  proof  by  affidavit,  that  a 
person,  not  a  party  to  the  action,  makes  a  demand  against 
him  for  the  same  debt  or  property,  without  collusion  with 
him,  apply  to  the  court,  upon  notice  to  that  person  and 
the  adverse  party,  for  an  order  to  substitute  that  person 

•Citing  23  Cyc.  31;  North  Pac.  Lbr.  Co.  v.  Lang,  28  Ore.  246;  42  Pac.  799;  52 
Am.  St.  Rep.  780;  Newhall  v.  Hastens,  70  111.  156;  Duke  L.  &  Co.  v.  Duke,  etc.,  93 
Mo.  App.  244. 

0  N.  Y.  Code  of  Civ.  Pro..  §§  820.  820a ;  Mun.  Ct.  Act,  §  187. 

1  Rev.  Laws  of  Mass.    (1902),   Ch.   173,   §  37. 

2  Bates  Ann.   Ohio  Stats.,  §  5016. 

3  Cal.   Code  of  Civ.    Pro..    §   386. 

*  Del.    Rev.  Code,   Ch.    106,   §§  34,    35. 
18  Gen.   Stat.   of  Conn.    (Rev.   of  1902),   §   1019. 
8  Oregon  Ann.   Codes  and  Stats.,   §  40. 
7  Ga.  Code,  Art.  3,  Ch.  6,  J§  4896  et  teq. 


INTERPLEADER.  349 

in  his  place,  ana  to  discharge  him  from  liability  to  either, 
on  his  paying  into  court  the  amount  of  the  debt,  or  de- 
livering the  possession  of  the  property,  or  its  value,  to 
such  person  as  the  court  directs ;  or  upon  it  appearing  that 
the  defendant  disputes,  in  whole  or  in  part,  the  liability 
as  asserted  against  him  by  different  claimants,  or  that 
he  has  some  interest  in  the  subject  matter  of  the  contro- 
versy which  he  desires  to  assert,  his  application  may  be 
for  an  order  joining  the  other  claimant  or  claimants  as 
co-defendants  with  him  in  the  action.  The  court  may,  in 
its  discretion,  make  such  order,  upon  such  terms  as  to 
costs  and  payments  into  court  of  the  amount  of  the  debt, 
or  part  thereof,  or  delivery  of  the  possession  of  the  prop- 
erty, or  its  value  or  part  thereof,  as  may  be  just,  and 
thereupon  the  entire  controversy  may  be  determined  in 
the  action." 

Section  820a  of  the  same  code,  added  to  take  effect 
September  1,  1908,  allows  a  debtor  to  bring  an  action  of 
interpleader  when  any  sum  of  money  shall  be  due  and 
payable  under  or  on  account  of  a  contract  and  the  whole 
or  any  part  thereof,  exceeding  fifty  dollars  in  amount, 
shall  be  claimed  or  demanded  by  adverse  claimants.  The 
text  of  this  section  is  as  follows:  "  When  any  sum  of 
money  shall  be  due  and  payable  under  or  on  account  of  a 
contract,  and  the  whole,  or  any  part  thereof,  exceeding 
fifty  dollars  in  amount,  shall  be  claimed  or  demanded  by 
adverse  claimants  thereto,  the  debtor  may  bring  suit  in 
any  court  having  jurisdiction  thereof  and  of  the  parties, 
demanding  judgment  of  interpleader,  and  that  the  debtor 
be  permitted  to  pay  the  amount  of  the  debt  into  court, 
and  that  such  debtor  upon  such  payment  into  court  be 
discharged  from  any  further  liability  to  any  of  the  parties 
to  the  action.  When  service  of  the  summons  and  com- 
plaint shall  have  been  made  upon  all  such  claimants,  the 
plaintiff  may  make  application,  by  petition  or  upon  affi- 
davits for  an  order  permitting  and  directing  the  plaintiff 


350  PROCEDURE. 

to  pay  the  amount  of  the  debt  into  court,  and  that  the 
plaintiff,  upon  the  payment  into  court  of  the  amount  of 
the  debt  as  required  by  the  order,  be  discharged  from  any 
further  liability  to  any  of  the  defendants  in  such  action, 
and  the  court,  upon  satisfactory  proof  by  affidavit  or 
otherwise,  as  the  court  may  require,  of  the  facts  alleged 
in  the  complaint,  and  that  the  whole  or  part  of  the  debt 
is  claimed  adversely  by  the  defendants  without  any  collu- 
sion on  the  part  of  the  plaintiff,  and  that  the  amount 
thereof  is  not  in  dispute  may  make  such  an  order,  upon 
such  terms  as  to  costs  and  disbursements  payable  out  of 
the  money  so  adversely  claimed  as  to  the  court  may  seem 
just,  and  upon  the  payment  into  court  of  the  amount  of 
such  debt,  and  complying  with  the  terms  of  such  order, 
the  plaintiff  shall  stand  discharged  from  any  further 
liability  to  any  of  the  defendants  in  said  action  upon  ac- 
count of  such  debt  and  contract.  Notice  of  such  ap- 
plication, together  with  copies  of  the  papers  upon  which 
the  same  is  made,  shall  be  personally  served  on  each  of 
the  defendants,  at  least  five,  and  not  more  than  fifteen 
days  before  the  return  day  thereof." 

Section  187  of  the  Municipal  Court  Act  of  New  York 
City18  provides  for  interpleader  in  certain  cases  as  fol- 
lows: 

"A  defendant  against  whom  an  action  to  recover  upon 
a  contract,  or  an  action  to  recover  a  chattel  is  pending, 
may,  at  any  time  before  answer,  upon  proof,  by  affidavit, 
that  a  person  not  a  party  to  the  action,  makes  a  demand 
against  him  for  the  same  debt  or  property,  without  collu- 
sion with  him,  apply  to  the  court,  upon  notice  to  that  per- 
son and  the  adverse  party,  for  an  order  to  substitute  that 
person  in  his  place,  and  to  discharge  him  from  liability 
to  either,  on  his  paying  into  court  the  amount  of  the  debt, 
or  delivering  the  possession  of  the  property,  or  its  value, 

MThe  Municipal  Court  of  the  City  of  New  York  Is  of  limited  jurisdiction,  and, 
speaking  generally,  has  jurisdiction  of  civil  actions  Involving  $500  or  less. 


INTERPLEADER.  351 

to  such  person  as  the  court  directs ;  or  upon  it  appearing 
that  the  defendant  disputes,  in  whole  or  in  part,  the  liabil- 
ity as  asserted  against  him  by  different  claimants,  or  that 
he  has  some  interest  in  the  subject  matter  of  the  contro- 
versy which  he  desires  to  assert,  his  application  may  be 
for  an  order  joining  the  other  claimant  or  claimants,  as 
co-defendants  with  him  in  the  action.  The  court  may,  in 
its  discretion,  make  such  order,  upon  such  terms  as  to 
costs  and  payments  into  court  of  the  amount  of  the  debt, 
or  part  thereof,  or  delivery  of  the  possession  of  the  prop- 
erty, or  its  value  or  part  thereof,  as  may  be  just,  and 
thereupon  the  entire  controversy  may  be  determined  in 
the  action." 

§  344.    Interpleader  When  Action  Brought  in  Court  Hav- 
ing No  Jurisdiction  to  Interplead. 

Where  two  brokers  claim  commission  on  the  same  sale 
to  the  same  purchaser,  and  one  of  them  sues  the  vendor 
for  the  commission  in  a  court  without  jurisdiction  to  ac- 
cord the  right  of  interpleader,  the  vendor  may  bring  an 
action  of  interpleader  in  a  court  having  such  juris- 
diction as,  for  example,  in  New  York  where  such  action 
of  interpleader  may  be  brought  in  the  Supreme  Court.19 
This  applies,  of  course,  only  in  those  states  where  inter- 
pleader in  broker's  actions  is  allowed. 

§  345.    Requisites  of  Interpleader. 

Even  where  interpleader  in  brokers'  actions  is  per- 
mitted, sufficient  grounds  for  the  interpleader  must,  of 
course,  be  shown.  Fragments  of  the  essentials  of  inter- 
pleader are  given  in  the  various  cases  and  general  treat- 
ment is  accorded  the  subject  in  text  books  and  encyclo- 
pedia. The  danger  of  a  double  vexation  must  be  real,  and 

M  Dardonville  v.    Smith,    133  App.   Div.   234    (N.   Y.    1909). 


352  PROCEDURE. 

a  mere  suspicion  of  a  risk  will  not  be  sufficient  to  warrant 
interpleader.20 

Various  authorities  lay  down  different  conditions  un- 
der which  the  remedy  may  be  invoked,  among  them  being 
that  no  other  adequate  remedy  exists ;  proper  showing  of 
the  identity  of  the  thing  claimed;  privity  of  estate,  title 
or  contract  between  the  various  claimants;  that  the  per- 
son seeking  the  interpleader  has  no  beneficial  interest  in 
the  thing  claimed;  that  he  cannot  determine  without  haz- 
ard to  himself,  to  which  of  the  defendants  or  claimants 
the  thing  belongs,  etc.  The  authorities  are,  however,  not 
uniform  in  holding  that  all  these  conditions  must  exist, 
and  the  authorities  given  in  the  various  annotated  codes 
and  the  digests  should  be  consulted  to  ascertain  the  ex- 
tent of  the  views  of  the  courts  of  each  state.21 

§  346.  Interpleader  Makes  Actions  at  Law  Equity  Suits. 
Where  a  third  party  is  interpleaded  in  an  action  at 
law,  the  action  becomes  one  in  equity.  We  shall  not  at- 
tempt to  go  into  explanatory  details  showing  how  this  is 
brought  about.  It  is  sufficient  to  refer  to  the  matter  and 
indicate  a  few  authorities.22 

»  Metropolitan  Life  Ins.  Co.  v.  Hamilton,  70  Atl.  677  (N.  J.  1908),  (citing  Blair 
y.  Porter,  13  N.  J.  Eq.  267;  Fitch  v.  Brower,  42  N.  J.  Eq.  300;  11  Atl.  330;  Atkin- 
son v.  Manks,  1  Cow.  (N.  Y.)  691;  Crane  v.  McDonald,  118  N.  Y.  648;  23  N.  E.  991). 

21  Crane  v.    McDonald,    118  N.   Y.   648    (1889)    contains  a   discussion  of  the  subject. 

22  Vandewater  v.   Mut.    Reserve  L.    Ins.   Co..    44   Misc.    316    (N.   Y.    1904).      See   also 
Clark  v.  Mosher,   107  N.  Y.  118   (1887)  ;  Windecker  v.  Mut.  Life  Ins.  Co.,   12  App.   Div. 
73    (N.   Y.    1896).     As   to   interpleader  proceedings  in   actions  in   the  City  Court   of   New 
York,    making  actions   at   law   equitable  actions,    see   Schreiber  v.    Dry   Dock    Sav.    Inst., 
59   Misc.   408    (N.    Y.    1908). 


PART    VI.— CONTRACTS    FOR    SALE    OF 
REAL    ESTATE. 


CHAPTER   XXXVI. 

AGREEMENTS  RELATING  TO  THE  SALE  OF 
REAL  ESTATE. 

§  347.    Method  of  Presentation. 

In  the  preceding  chapters  of  the  present  volume,  every 
proposition  is  fortified  by  the  citation  of  authority.  In 
this  chapter  the  citation  of  authorities  is  omitted.  This  is 
so  because  a  discussion  of  contracts  for  the  sale  and  ex- 
change of  real  estate,  adequate  for  reference  on  all  of  the 
many  varying  occasions  which  are  constantly  arising, 
might  of  itself  occupy  an  entire  volume. 

The  present  chapter  therefore  makes  no  pretence  to  be 
a  reference  help,  but  confines  itself  to  a  practical  discus- 
sion of  the  more  important  matters  to  be  considered  when 
such  contracts  are  drawn. 

§  348.    Nature  of  a  Sale. 

It  is  often  supposed  that  there  is  something  palpably 
illegal  in  attempting  to  sell  real  estate  without  entering 
into  a  preliminary  written  agreement  designed  to  bring 
about  the  conveyance  of  the  property.  This,  however,  is 
erroneous,  for  two  persons  may  lawfully  agree  orally  to 
the  sale  and  purchase  of  real  estate,  and  if  they  carry  out 
their  oral  agreement  by  the  final  conveyance  of  the  prop- 
erty by  deed,  the  absence  of  a  written  contract  is  of  no 

353 


354  CONTRACTS   FOB   SALE    OF    REAL   ESTATE. 

consequence.  Indeed,  very  anciently  the  transfer  of  title 
to  real  estate  was  itself  quite  informal.  An  oral  declara- 
tion of  transfer  made  upon  the  land,  or  the  symbolic  de- 
livery of  the  property  by  the  delivery  of  a  twig  of  a  tree 
growing  on  the  land,  and  the  like,  were  among  the  early 
methods  of  transferring  title. 

However  satisfactory  these  methods  may  have  been 
in  primitive  days,  they  would  be  utterly  insufficient  now. 
If  employed,  they  would  lead  to  endless  confusion  and 
litigation  and  to  a  deplorable  lack  of  certainty  in  the  se- 
curity of  one's  title  to  land.  To  avoid  all  this,  the  law 
makers  long  ago  required  such  agreements  to  be  in  writ- 
ing. The  subject  is  almost  universally  regulated  by  stat- 
ute, known  in  nearly  all  jurisdictions  as  * '  The  Statute  of 
Frauds."1 

§  349.    Usual  Methods  of  Concluding  a  Sale. 

Ordinarily  a  sale  of  real  estate  is  brought  about  by 
real  estate  agents,  or  less  frequently  by  the  parties  them- 
selves. The  services  of  a  lawyer  are  scarcely  ever  sought 
until  the  negotiations  are  well  under  way  and  frequently 
not  until  all  the  details  have  been  practically  agreed  upon 
and  a  deposit  paid  on  account.  The  wisdom  of  this  is 
doubtful,  but  the  conditions  are  sometimes  such  as  to  ren- 
der it  unavoidable. 

When  the  seller  of  real  estate  has  been  offered  terms 
with  which  he  is  satisfied,  he  is  anxious  to  ' '  strike  while 
the  iron  is  hot."  And  the  purchaser,  offered  the  prop- 
erty at  a  price  satisfactory  to  him,  is  more  than  willing  to 
have  the  transaction  "  clinched  "  at  once  by  a  written 
contract.  Also,  the  broker  when  he  has  performed  his 
part  in  the  sale  of  real  estate  by  bringing  about  a  meet- 
ing of  the  minds  of  the  parties,  is  naturally  anxious  to 
see  that  understanding  perfected  by  a  written  contract. 

1  See  §  350  infra. 


AGREEMENTS  RELATING  TO  SALE  OF  REAL,  ESTATE.   355 

In  some  states  he  must  secure  an  enforceable  contract 
before  he  is  entitled  to  his  commissions.2 

Under  such  circumstances  no  deliberation  is  indulged 
in  and  the  contract  is  usually  drawn  on  the  spot  or  at  the 
nearest  convenient  place,  with  such  knowledge,  or  lack 
of  knowledge  of  the  requirements  and  effect  of  an  agree- 
ment of  sale  of  real  property  as  the  parties  may  them- 
selves possess.  And  yet,  as  we  shall  see  later,  the  con- 
tents of  the  written  contract  are  of  the  utmost  importance. 

A  contract  for  the  sale  of  real  estate  should  be  drawn 
with  the  greatest  care,  and,  whenever  circumstances  per- 
mit, before  signing  it  the  vendor  should  produce  his  title 
deeds,  abstracts,  or  title  insurance  policies  and  be  ready 
to  furnish  accurate  information  concerning  the  property 
and  his  title  thereto. 

The  reason  for  submitting  the  title  deeds,  abstracts, 
or  title  insurance  policies  for  examination  is  found  in  the 
fact  that  from  such  documents  it  will  usually  appear  what 
encumbrances  and  defects  the  vendor's  title  is  burdened 
with,  and  provision  may  be  made  in  the  contract  accord- 
ingly. Usually  the  purchaser  makes  up  his  mind  to  buy 
after  a  physical  inspection  of  the  property,  and  it  is  quite 
immaterial  to  him  whether  there  are  party  walls,  restric- 
tions, street  railroads,  etc.  In  fact,  all  these  may  only 
serve  to  make  the  property  more  desirable  to  him,  and  if 
discussed  at  the  time  of  making  the  contract,  little  diffi- 
culty will  usually  be  found  in  arriving  at  an  agreement 
properly  providing  for  or  against  such  matters. 

But  after  a  contract  is  once  signed,  if  nothing  is  said 
therein  about  these  matters,  "  experienced  purchasers  " 
— or  perhaps  their  attorneys— scent  all  manner  of  future 
difficulty  on  account  of  these  very  things,  and,  as  the  ex- 
istence of  some  of  them  may  sometimes  afford  sufficient 
ground  to  justify  the  purchaser  in  refusing  to  carry  out 
the  contract,  the  vendor  has  the  alternative  of  making  an 

a  See    §§    117-119    supra. 


356  CONTRACTS   FOE   SALE    OF    REAL,   ESTATE. 

'  *  allowance  ' '  on  the  price,  or  of  involving  himself  in  liti- 
gation which  may  tie  up  the  property  for  many  months. 

§  350.    Oral  Agreements  and  Informal  Written  Agree- 
ments. 

As  already  stated,  the  parties  to  an  agreed  sale  of 
real  estate  sometimes  find  it  inexpedient  to  delay  long 
enough  to  adjourn  to  some  convenient  place  to  draw  a 
formal  contract.  In  such  case  a  money  "  deposit  "  is 
usually  paid  by  the  purchaser  "  to  bind  the  bargain  " 
and  a  "  receipt  "  for  the  money  is  given.  Sometimes 
these  ' '  receipts  ' '  contain  the  elements  of  a  contract  and 
serve  the  purposes  of  a  more  formal  instrument  and  are 
enforceable  as  contracts  by  the  purchaser. 

We  shall  refer  to  the  essentials  of  a  contract  pres- 
ently, but  here  we  shall  only  discuss  the  legal  status  of 
the  parties  where  a  "  deposit  "  is  paid  and  no  writing 
is  entered  into,  or  where  the  writing  entered  into  does 
not  measure  up  to  the  dignity  of  a  contract. 

If  the  vendor  of  real  property  has  accepted  a  deposit 
and  has  not  signed  such  a  "  receipt  "  as  might  be  con- 
strued to  be  a  valid  contract  in  writing,  he  may,  when 
called  upon  to  transfer  the  property,  refuse  to  do  so, 
provided  he  returns  the  deposit.  He  cannot,  however, 
refuse  to  transfer  the  property  and  still  keep  the  deposit. 

On  the  other  hand,  if  the  purchaser  when  called  upon 
to  complete  the  transaction,  does  not  then  wish  to  pur- 
chase the  real  estate,  he  may  refuse  if  he  will  but  he  can- 
not recover  his  deposit.  He  cannot  be  forced  to  complete 
his  undertaking,  but  he  forfeits  the  money  he  has  already 
paid. 

The  reason  for  this  advantage  which  the  seller  has 
over  the  buyer,  springs  out  of  the  Statute  of  Frauds  be- 
fore referred  to.3  This  statute  usually  provides  that 
every  agreement  for  the  sale  of  real  estate  must  be  in 

»j  348  tupra;  *ee  alao  §5  31-37  mpra. 


AGREEMENTS  RELATING  TO  SALE  OF  REAL  ESTATE.   357 

writing,  signed  by  the  vendor  or  his  agent.  This  being 
true,  the  vendor  is  never  bound  by  an  unwritten  agree- 
ment to  sell,  except  in  the  rare  cases  where  he  permits 
the  buyer  to  enter  into  possession  of  the  property,  which 
is  usually  referred  to  as  part  performance  and  takes  the 
transaction  beyond  the  point  where  it  is  affected  by  the 
Statute  of  Frauds.  The  subject  of  part  performance  is 
too  intricate  for  discussion  here.  It  is  sufficient  to  say, 
however,  that  the  authorities  are  in  practical  unanimity 
that  "  part  payment  "  of  the  purchase  price  is  not  part 
performance,  and  does  not  of  itself  bind  the  vendor. 

The  general  proposition  may  be  restated  briefly  thus: 
Where  a  deposit  has  been  made  to  bind  an  oral  agree- 
ment for  the  sale  of  real  property  and  the  receipt  does 
not  amount  to  a  valid  contract,  the  purchaser,  if  he  re- 
fuses to  complete  the  agreement— the  vendor  being  able 
and  willing,— cannot  recover  his  deposit.  On  the  other 
hand,  if  the  seller  is  not  willing  to  carry  out  the  agree- 
ment or  is  unable  to  do  so,  the  purchaser  cannot  enforce 
specific  performance  but  may  recover  his  deposit. 

If  the  seller  tenders  performance,  the  purchaser  can- 
not raise  the  question  of  no  written  contract.  He  must 
either  perform  his  part  of  the  agreement  or  lose  his  de- 
posit. The  seller  may,  however,  raise  that  question  and 
decline  to  proceed  with  the  agreement  if  he  so  desires, 
merely  returning  the  purchaser's  deposit.  This  is  so 
because  the  Statute  of  Frauds  almost  everywhere  pro- 
vides that  the  contract  must  be  signed  by  the  vendor  or 
his  authorized  agent,  but  no  requirement  is  made  as  to 
the  purchaser's  signature. 

§  351.    Options  on  Real  Estate. 

We  have  already  discussed  the  broker's  status  when 
he  procures  an  option.4  A  general  idea  of  the  nature  of 

« This   discussion    occurs   in    §§    149,    163   supra. 


358  CONTRACTS   FOE   SALE    OF    REAL   ESTATE. 

an  option  is,  however,  not  without  value.  An  option  on 
real  estate  is  an  exclusive  privilege  to  buy  such  real 
estate,  and  a  contract  for  an  option,  or  option  contract, 
is  the  agreement  by  which  the  privilege  is  created.  It 
neither  transfers  nor  agrees  to  transfer  title  to  the  prop- 
erty, but  confers  upon  its  holder  the  right,  within  the 
time  limited  by  the  option,  to  buy  the  property  upon  the 
terms  provided. 

The  option  is  a  one-sided  agreement,  not  binding  on 
the  holder  until  accepted  by  him,  but  the  moment  the 
holder  or  the  proposed  purchaser  accepts  the  option, 
both  parties  are  bound — the  owner  to  sell,  and  the  pur- 
chaser to  buy.  The  acceptance  of  the  option  may  be  in 
writing,  or  by  mere  assent,  or  by  tender  of  the  price. 

The  term  "  acceptance  "  as  used  in  connection  with 
an  option  must  be  understood.  The  mere  physical  "  re- 
ceiving "  of  the  written  offer  which  constitutes  the  op- 
tion is  not  an  "  acceptance."  An  assent  to  the  offer 
contained  in  the  option  is  necessary  to  constitute  an 
acceptance. 

An  option,  unless  founded  upon  a  consideration,  may 
be  revoked  or  withdrawn  at  any  time  before  acceptance, 
and  it  has  been  held  that  a  sale  of  the  property  to  an- 
other party  amounts  to  a  withdrawal.  It  is  essential, 
too,  that  the  option  shall  be  in  writing  and  be  signed  by 
the  vendor. 

§  352.    Essential  Features  of  a  Contract  for  Sale  of  Real 
Property. 

The  essentials  of  a  valid  contract  for  the  sale  or  ex- 
change of  real  property  are  the  same  as  for  any  other 
contract,  with  the  added  requirement  that  it  must  be  in 
writing  and  be  signed  by  the  vendor.  No  particular 
words  are  necessary.  A  contract  is  sufficient  if  it  gives 
the  names  of  the  seller  and  the  buyer,  and  expresses  the 


AGREEMENTS  RELATING  TO  SALE  OF  REAL  ESTATE.   359 

consideration  and  describes  the  land  to  be  conveyed. 
The  agreement  must  be  mutual— binding  upon  both  par- 
ties. In  most  states  no  seal  is  required. 

The  books  abound  with  cases  in  which  the  courts 
have  passed  on  various  writings  and  have  either  sus- 
tained or  rejected  them  as  contracts.  Some  authorities 
say  that  the  contract  may  be  made  up  of  several  writ- 
ings, even  if  some  of  the  writings  are  addressed  to  a 
third  party,  that  it  need  be  signed  only  by  the  seller  and 
that  the  land  may  even  be  identified  orally.  Others  say 
that  the  paper  should  state  the  whole  contract  with  rea- 
sonable certainty  so  that  the  substance  of  it  may  be  made 
to  appear  from  the  record  itself  without  resort  to  any 
oral  evidence.  But  all  this  uncertainty  arises  usually  by 
reason  of  the  parties  trusting  to  informal  writings  or 
mere  "  receipts  "  and  would  not  arise  if  formal  agree- 
ments, blanks  for  which  are  almost  everywhere  obtain- 
able, were  entered  into. 

§  353.    Parties  to  the  Contract. 

In  contracts  relating  to  the  sale  of  real  estate,  as  in 
any  other  contracts,  there  must  always  be  two  parties. 
The  parties  must  be  capable  of  contracting.  Usually 
infants  or  persons  of  unsound  mind  cannot  contract. 
Application  to  the  courts  is  necessary  in  such  cases  and 
also  in  the  case  of  certain  corporations  whose  objects 
are  religious,  charitable  and  the  like.  The  law  in  some 
states  imposes  on  married  women  limitations  in  respect 
to  their  right  to  make  contracts. 

The  owner  of  the  property  may  make  the  contract  in 
his  own  name  as  vendor,  but  in  all  cases  it  is  advisable 
if  he  is  married,  to  have  his  wife  join  in  the  contract  as 
this  often  avoids  troublesome  complications  later.  In 
some  states  the  husband  must  join  in  a  contract  made  by 
the  wife  for  the  sale  of  her  real  property. 


360  CONTEACTS  FOR   SALE   OF   REAL   ESTATE. 

The  right  of  an  alien  to  make  a  contract  for  the  sale 
of  real  property  is  another  of  those  questions  concerning 
which  much  may  be  said.  It  is  a  matter  of  local  regula- 
tion, but  in  modern  times  the  rights  of  aliens  with  respect 
to  real  estate  have  been  so  much  enlarged  that  they  may 
contract  practically  without  limitation. 

A  person  may  make  a  contract  to  sell  property  even 
though  he  does  not  own  it,  but  if  he  fails  thereafter  to 
acquire  the  title  or  to  procure  a  conveyance  in  accord- 
ance with  his  contract,  he  subjects  himself  to  damages. 

Business  corporations  are  competent  to  make  con- 
tracts for  the  sale  of  realty.  The  rights  of  executors, 
trustees,  administrators  and  guardians  to  make  such  con- 
tracts present  further  questions.  An  executor  or  trustee 
who  is  given  power  of  sale  under  a  will,  may  usually  sell 
without  application  to  the  court.  And  so  may  an  "  ad- 
ministrator with  the  will  annexed,"  who  succeeds  to  the 
executor's  power  of  sale.  Otherwise  application  to  the 
court  is  necessary  and  reasons  for  sale  must  usually  be 
shown.  Where  there  is  any  doubt  as  to  whether  applica- 
tion to  the  court  is  necessary,  it  is  always  advisable  to 
insert  in  the  contract  that  the  sale  is  "  subject  to  the 
approval  of  the  court,"  and  this  affords  at  least  some 
protection  in  some  cases. 

§  354.    Execution  of  Contract  of  Sale. 

The  parties  to  a  contract  for  sale  of  real  estate  may 
sign  it  in  person,  or  it  may  be  signed  for  either  party  by 
the  agent  of  that  party.  The  broker's  right  to  contract 
has  already  been  discussed  fully.5  If  the  contract  is 
made  by  a  person  acting  in  a  representative  capacity, 
such  as  an  executor  for  instance,  he  may  sign  the  con- 
tract with  his  own  name  without  adding  his  official  title 
at  the  end  of  the  signature,  provided  he  is  described  in 

B  See  Ch.  IV  supra. 


AGREEMENTS  RELATING  TO  SALE  OP  REAL  ESTATE.   361 

the  contract  in  his  representative  capacity.  If  lie  is  not 
so  described,  but  still  signs  without  proper  addition  of 
the  official  title  to  his  signature,  he  becomes  individually 
liable. 

It  is  also  said,  and  in  some  states  declared  by  statute, 
that  an  instrument  executed  by  the  grantee  of  a  power, 
as  for  instance  an  executor  or  trustee  with  power  of  sale, 
conveying  an  estate  or  creating  a  charge  which  he  would 
have  no  right  to  convey  or  create  except  by  virtue  of  the 
power,  shall  be  deemed  a  valid  execution  of  the  power, 
although  the  power  be  not  recited  or  referred  to  therein. 
For  example,  if  A  is  by  deed  or  will  given  power  to  sell 
real  property,  and  he  has  no  beneficial  interest  in  the 
property  itself  or  in  the  proceeds  of  a  sale  thereof,  a 
deed  naming  A  merely  as  an  individual,  and  signed  by 
him  as  an  individual,  would  in  such  case  be  held  a  con- 
veyance by  virtue  of  the  power. 

On  the  other  hand,  if  A  is  given  such  power  to  sell 
and  is  beneficially  interested  in  the  property  or  in  the 
proceeds  of  sale,  a  deed  by  him  as  an  individual  would 
convey  only  his  individual  interest,  and  in  order  to  con- 
vey the  entire  property  by  virtue  of  his  power  of  sale, 
it  would  be  necessary  either  to  describe  him  in  the  deed 
as  trustee,  executor,  or  whatever  his  official  title  may  be, 
or  that  the  deed  contain  a  recital  that  it  is  made  under 
the  power  of  sale,  or,  at  the  very  least,  that  A  sign  the 
deed  with  the  words  "  as  trustee,  etc.,"  "  as  executor, 
etc.,"  as  the  case  may  be,  added  to  his  name.  Failure  to 
observe  this  distinction  in  the  signing  of  such  instru- 
ments sometimes  leads  to  considerable  difficulty. 

No  particular  form  of  signature  is  necessary  to  bind 
a  corporation.  And  it  has  been  held  that  the  agent  who 
affixes  the  signature  of  the  corporation  need  not  add  his 
own  name  after  that  of  the  corporation.  It  is  always 
better,  however,  to  have  the  full  corporate  signature 
affixed  to  the  contract  by  some  authorized  officer  and  to 


362  CONTRACTS   FOR   SALE   OF   REAL   ESTATE. 

have  the  corporate  seal  attached.  Otherwise  it  may  be 
difficult,  when  necessary,  to  prove  the  authority  of  the 
person  who  signed  for  the  corporation.  In  any  such  case 
the  name  of  the  corporation  is  affixed,  followed  by  the 
official  signature  of  the  affixing  officer.6 

It  is  always  advisable  to  have  a  contract  for  sale  of 
real  estate  acknowledged  by  the  parties,  as  in  some 
states  a  contract  duly  acknowledged  is  admissible  in 
evidence  without  further  proof,  which  is  not  the  case 
when  the  acknowledgment  is  omitted. 

•  See  §5  44,  46  mpn. 


CHAPTER   XXXVII. 

SUBJECT   MATTER   OF   CONTRACTS   FOR 
SALE   OF   REAL   ESTATE. 

§  355.    Drafting  Contract  for  Sale  of  Real  Estate. 

Regular  forms  of  contract  are  easily  obtainable  at 
any  law  stationer's.1  Hence,  the  elemental  essentials  of 
such  contracts  need  not  be  discussed.  Having  this  form, 
the  question  arises,  How  shall  its  blanks  be  filled? 

First  of  all,  it  is  absolutely  imperative  that  all  the 
oral  understandings  of  the  parties  be  reduced  to  writing 
and  put  into  the  contract.  If  the  vendor  orally  agrees 
that  he  will ' '  throw  in  ' '  with  the  sale  the  carpets,  chan- 
deliers or  other  personal  property  on  the  premises,  see 
that  it  is  so  stated  in  the  contract.  If  he  resorts  to  the 
old-fashioned— and  we  may  say  somewhat  conceited- 
language  that  "  his  word  is  as  good  as  his  bond,"  and 
that  if  he  says  he  will  allow  the  personal  effects  men- 
tioned to  pass  with  the  property  or  makes  any  other  oral 
agreement,  he  means  all  he  says,  the  statement  is  in  no- 
wise binding  and  should  be  declared  unsatisfactory.  If 
the  vendor  means  to  keep  his  promise,  he  should  have  no 
objection  to  putting  it  in  writing. 

It  is  not  wise  to  rest  anything  on  a  mere  "  under- 
standing "  between  the  parties.  When  once  a  written 
agreement  is  made,  the  law  holds  that  all  the  under- 
standings and  arrangements  of  the  parties  are  included 
in  this  written  agreement,  and  oral  evidence  is  not  ad- 
missible to  contradict  or  vary  its  terms.  There  are  ex- 

1  See  the  forms  used  in  various  states,  given  in  Part  VII — Forms  17-31,  Oh. 
XXXIX  infra. 

363 


364  CONTRACTS   FOE   SALE   OF   REAL   ESTATE. 

ceptions  to  this  rule  of  law  but  we  shall  not  state  them 
here.  Compliance  with  the  rule  is  always  safe  and  is 
much  more  satisfactory  than  to  attempt  to  determine 
when  exceptions  may  safely  be  made. 

§  356.    Description  of  Property  in  Contracts  of  Sale. 

Failure  to  properly  describe  property  in  the  contract 
for  its  sale  has  given  rise  to  much  litigation.  Often  the 
contract  is  entered  into  so  hastily  that  it  is  impracti- 
cable to  obtain  any  accurate  description  for  inclusion  in 
the  contract. 

The  courts  say  that  the  contract  must  specifically  or 
with  sufficient  certainty  describe  and  identify  the  land 
proposed  to  be  conveyed.  There  are  various  ways  of 
identification — a  declaration  as  to  its  present  ownership; 
reference  to  an  earlier  deed;  by  the  enumeration  of  the 
particular  grants  of  which  a  tract  is  composed;  by  a 
street  number,  etc. 

All  these  methods  are,  however,  unsatisfactory. 
There  should  be  a  detailed  description  of  the  property 
itself.  The  state  and  county  in  which  the  land  lies  should 
be  given,  and  in  states  where  land  is  so  subdivided,  the 
range,  township,  section  and  quarter  section  of  which  it 
forms  a  part  should  be  set  forth. 

From  the  viewpoint  of  the  buyer,  the  frequent  prac- 
tice of  describing  city  property  by  street  number  alone 
is  most  unsatisfactory  as  well  as  dangerous.  When  prop- 
erty is  thus  referred  to  by  street  number  alone,  the  pur- 
chaser must  accept  a  deed  of  the  property  bearing  the 
street  number,  regardless  of  its  actual  dimensions.  He 
may  have  understood  the  property  to  have  a  frontage 
of  100  feet,  but  if  the  property  bearing  that  street  num- 
ber has  a  frontage  of  but  75  feet,  he  is  bound  to  accept 
its  transfer  in  satisfaction  of  his  contract,  unless  he  has 
been  misled  by  misrepresentations.  If  the  property  is 


SUBJECT   MATTER   OF   CONTRACTS.  365 

described  by  street  number  and  also  by  dimensions,  the 
purchaser  is  entitled  to  the  frontage  given  by  the  dimen- 
sions in  the  absence  of  any  other  modifying  circum- 
stances. 

The  best  method  is  to  describe  the  property  by  metes 
and  bounds.  By  this  is  meant  that  the  actual  distance  in 
feet  and  inches  from  the  starting  point  be  stated,  that 
the  courses  be  stated,  together  with  the  specific  distance 
of  each  course,  and  also  whether  the  courses  run  parallel 
to  side  streets  or  at  right  angles  to  the  main  street,  and 
if  the  courses  run  through  party  walls,  that  fact  should 
be  distinctly  stated. 

A  party  wall  may  be  defined  as  a  wall  which  serves 
for  two  buildings.  This  perhaps  is  not  a  technical  defini- 
tion but  is  at  least  one  which  may  be  easily  understood. 
The  courts  have  held  that  under  certain  conditions  a 
party  wall  may  be  an  encumbrance  upon  land.  In  other 
words,  situations  frequently  arise  where  the  existence 
of  a  party  wall  between  two  buildings  may  give  to  either 
owner  legal  rights,  known  as  "  easements,"  in  the  prop- 
erty of  the  other.  In  such  case  the  party  wall  is  an  en- 
cumbrance, and  while  this  is  not  ordinarily  of  such  a 
nature  as  to  be  seriously  detrimental  to  the  property,  it 
may  under  certain  conditions  be  sufficient  and  good 
ground  to  refuse  to  take  title  to  the  property,  and  the 
possibility  of  complication  should  be  avoided  by  stating 
the  facts. 

Generally  the  existence  of  an  encumbrance  on  real 
property  not  mentioned  in  the  contract  for  the  sale  of 
this  property,  gives  the  purchaser  the  right  to  reject  the 
title  and  sue  for  damages.  The  damages  are  usually 
made  up  of  the  amount  paid  on  the  contract,  the  expenses 
of  examining  the  title  and  of  surveying  the  property, 
and  (though  not  in  all  cases)  the  difference  between 
what  the  property  is  actually  worth  (its  market  value) 
and  the  price  stated  in  the  contract. 


366  CONTRACTS   FOR   SALE   OP   REAL   ESTATE. 

The  parties  to  a  contract  for  the  sale  of  real  estate 
may,  of  course,  modify  or  wholly  annul  the  rights  and 
liabilities  which  the  law  imposes  on  each.  For  instance, 
they  may  agree  that  if  the  purchaser  fails  to  perform, 
the  seller  may  retain  the  deposit  as  liquidated  damages 
and  that  the  contract  be  then  deemed  null  and  void.  Or 
they  may  agree  that  if  the  seller  is  unable  to  make  good 
title  he  shall  return  the  deposit,  or  the  deposit  in  addi- 
tion to  certain  expenses,  and  that  the  contract  then  be- 
come inoperative.  Or  they  may  agree  that  the  failing 
party  shall  be  liable  to  the  other  in  a  fixed  amount  as 
liquidated  damages.  Or  they  may  agree  upon  the  situa- 
tion of  each  in  case  the  title  is  unmarketable.  Indeed, 
the  variations  which  may  be  engrafted  upon  the  legal 
status  of  the  parties  are  numerous.2 

§  357.    Statement  as  to  Ownership  in  Adjacent  Streets 
or  Highways. 

Another  question  which  frequently  arises  and  con- 
cerning which  a  clear  statement  should  be  made  in  the 
agreement  of  sale,  is  whether  the  seller  intends  to  trans- 
fer with  the  land  his  ownership  in  the  street  or  highway 
adjacent  to  the  land.  The  courts  say  it  is  a  matter  of 
intention,  but  at  the  same  time  in  a  contract  of  sale  this 
intention  is  usually  sought  to  be  found  in  the  language 
used  in  describing  the  property. 

The  rule  frequently  announced  is  that  the  bounding 
of  a  lot  by  the  exterior  line  of  an  abutting  street,  i.  e., 
the  line  separating  the  property  from  the  street,  as  con- 
tradistinguished from  bounding  it  by  the  street,  ex- 
cludes from  the  conveyance  any  part  of  the  abutting 
street,  unless  there  be  circumstances  indicating  a  differ- 
ent intention.  Thus,  where  the  description  commences 
upon  the  side  of  a  street,  as  for  instance  * '  beginning  at  a 

»  See  Forms  17-31,  Ch.  XXXIX  infra. 


SUBJECT   MATTER   OF   CONTRACTS.  367 

point  on  the  northerly  side  of  East  Fourteenth  Street," 
and  thence  along  that  side  to  a  point  specified,  the  gen- 
eral construction  is  that  no  ownership  in  the  street  is 
thus  conveyed. 

But  where  the  property  is  bounded  by  or  is  described 
as  on  or  along  a  highway  or  street,  or  running  along 
a  highway  or  street,  without  restricting  or  controlling 
words,  as  for  instance  "  and  thence  along  East  Four- 
teenth Street  "  as  distinguished  from  "  thence  along 
the  northerly  side  of  East  Fourteenth  Street,"  the  gen- 
eral rule  is  that  the  grantor's  title  in  the  land  to  the 
center  of  the  street  or  highway  is  included  in  the  grant. 

Where  the  contract  binds  the  purchaser  to  pay  a 
specific  sum  per  acre  and  bounds  the  property  "  by  ' 
certain  roads,  it  is  held  that  the  purchaser  is  not  re- 
quired to  pay  for  any  acreage  included  in  the  highway 
itself. 

And  where  lots  are  described  by  lot  numbers  with 
reference  to  a  map  on  which  the  lots  appear  as  bounded 
by  a  street,  the  conveyance  will  be  assumed  to  include 
the  abutting  streets  to  the  centre  whether  or  not  at  the 
the  time  of  the  conveyance  the  streets  have  been  actually 
opened.  This  presumption  will  not,  however,  hold  if  suc- 
ceeding words  in  the  conveyance  limit  the  effect  of  the 
reference  to  the  map,  as  where  the  reference  to  lot  num- 
bers is  followed  by  a  specific  description  which  limits  the 
lots  to  the  side  of  the  street,  or  where  the  description 
contains  appropriate  words  to  indicate  an  intention  to 
exclude  part  of  the  abutting  streets. 

If  the  purchaser  desires  to  assure  himself  that  his 
title  extends  to  the  center  of  the  street  or  highway,  he 
may  well  require  a  specific  statement  to  that  effect, 
which  usually  takes  the  form  of  a  clause  at  the  end  of  the 
description,  somewhat  as  follows:  "  Together  with  all 
the  right,  title  and  interest  of  the  party  of  the  first  part 
(or  grantor)  of,  in  and  to  the  streets  and  avenues  in 


368  CONTRACTS   FOE  SALE   OF   REAL   ESTATE. 

front  of  and  adjacent  to  said  premises  to  the  center  lines 
thereof  respectively."    This  usually  settles  all  doubt. 

§  358.    Statement  of  Gross  or  Acreage  Price. 

Another  question  sometimes  arising  is  whether  the 
parties  intended  to  sell  and  buy  for  a  gross  sum  though 
the  acreage  is  mentioned,  or  according  to  a  certain  price 
per  acre  though  the  acreage  is  not  mentioned.  If  proper 
words  are  chosen  to  express  the  intention  of  the  parties, 
there  can  be  no  difficulty.  While  we  cannot  dwell  on  the 
different  phases  of  the  question,  we  may  state  that  the 
safer  method  is  this:— If  it  is  intended  to  sell  a  plot  of 
unknown  acreage  at  a  fixed  price  per  acre,  it  should  be 
distinctly  stated  that  the  acreage  is  then  unknown  or  un- 
certain, that  the  price  is  so  much  per  acre,  and  that  the 
exact  acreage  is  to  be  determined  by  subsequent  survey 
or  agreement  of  the  parties.  If  the  sale  is  intended  to 
be  for  a  gross  sum  for  the  entire  land  irrespective  of  the 
number  of  acres,  then,  although  the  approximate  acreage 
may  be  stated  if  insisted  upon,  it  should  be  made  to 
appear  specifically  that  the  price  was  fixed  irrespective 
of  the  number  of  acres  within  the  plot. 

§  359.    Statement  of  Easements,  Negative  Easements, 
Encroachments,  Etc. 

Closely  involved  in  the  description  of  the  property 
and  therefore  discussed  under  that  head,  are  certain 
rights  or  encumbrances  known  as  easements,  negative 
easements,  and  the  like.  To  one  of  these  we  have  already 
referred  when  the  matter  of  party  walls  was  spoken  of. 
Another  is  a  matter  of  restrictions.  If  the  property  is 
restricted  and  this  is  not  stated  in  the  contract  for  sale, 
the  purchaser  has  a  legal  right  to  refuse  to  accept  the 
proffered  title.  This  is  because  restrictions,  or  as  the 
matter  is  popularly  known,  "  covenants  and  restric- 


SUBJECT    MATTER   OF   CONTRACTS.  369 

tions  ';  —by  which  is  usually  meant  covenants  against 
the  erection  of  certain  nuisances,  or  restrictions  against 
certain  uses  of  the  property— are  encumbrances  and 
what  are  known  in  law  as  "  negative  easements,"  and  if 
not  specified,  give  the  purchaser  the  right  to  refuse  to 
complete  the  contract  and  to  demand  damages  as  already 
mentioned. 

Another  factor  in  the  passing  of  titles  to  real  estate, 
especially  in  cities,  is  the  matter  of  encroachments.  The 
buildings  on  the  land  to  be  conveyed  may  encroach  upon 
adjoining  land,  or  buildings  on  adjoining  lands  may 
encroach  upon  the  land  to  be  conveyed.  Then,  too,  the 
buildings  or  some  addition  thereto  on  the  land  to  be 
conveyed  may  encroach  upon  the  street.  If  the  vendor 
has  taken  the  wise  precaution  of  having  his  property 
surveyed  before  entering  into  a  contract  of  sale  he  may 
usually  ascertain  whether  the  proposed  purchaser  is  will- 
ing to  accept  the  property  as  shown  by  the  survey,  and 
make  his  contract  accordingly. 

The  matter  of  encroachments  is  not  only  a  fruitful 
source  of  litigation  but  a  troublesome  proposition  be- 
sides. Encroachments  (not  provided  against  in  the  con- 
tract) must  be  substantial  to  warrant  the  refusal  to  take 
the  title  contracted  for.  That  is,  the  law  does  not  recog- 
nize immaterial  encroachments.  De  minimis  lex  non 
cur  at.  The  difficulty,  however,  always  is  to  make  up 
one's  mind  as  whether  the  encroachment  is  material. 
The  question  is  often  a  very  close  one  in  the  courts. 
Then,  too,  the  matter  is  often  affected  by  local  statutes 
which,  in  effect,  permit  encroachments  to  a  small  extent 
if  they  have  existed  for  stated  periods,  while  local  ordi- 
nances permitting  encroachments  of  stoops,  store  win- 
dows, bay  windows  and  the  like  to  a  limited  extent  upon 
the  street,  may  also  be  found.  Often  the  matter  of  en- 
croachments may  be  obviated  by  so-called  encroachment 
agreements.  Such  agreements  really  amount  to  a  con- 


370  CONTRACTS   FOB   SALE   OF    REAL   ESTATE. 

sent  to  the  existence  of  the  encroachment  by  the  person 
who  might  proceed  for  its  removal.  Sometimes,  but 
rarely,  the  encroachment  agreement  goes  further  and 
grants  the  soil  encroached  upon. 

The  encroachment  agreement  is  usually  employed 
where  the  buildings  on  the  land  to  be  conveyed  encroach 
upon  adjoining  land.  If  buildings  on  adjoining  land  en- 
croach substantially  upon  the  land  to  be  conveyed,  the 
vendor  is  usually  unable  to  convey  all  the  land  con- 
tracted for  because,  as  is  obvious,  the  part  encroached 
upon  cannot  be  conveyed  except  with  the  burden  of  the 
encroachment,  and  in  some  cases  the  vendor  has  no 
means  of  remedying  the  matter.  Even  in  such  cases, 
however,  arrangements  are  sometimes  made  which  en- 
able the  title  to  be  passed  to  the  satisfaction  of  the 
parties.  Forms  of  encroachment  agreements  are  given 
elsewhere.3  These  remarks,  which  scarcely  open  up  the 
subject  of  encroachments,  must  suffice  for  this  chapter 
which,  as  has  been  stated,  is  not  intended  as  a  presenta- 
tion of  the  law  of  real  estate  contracts  but  merely  as  a 
suggestive  and  advisory  discussion  in  connection  with 
the  precautions  to  be  observed  in  drawing  a  contract  of 
sale. 

"  Railroad  consents  "  should  also  be  specified,  though 
there  is  doubt  whether  a  consent  to  the  use  of  the  street 
for  railroad  purposes  would  be  a  proper  objection  to  a 
title,  particularly  if  the  railroad  is  in  actual  operation. 


§  360.    Leases  of  Property  Held  Under  Contract  of  Sale. 

If  there  are  any  outstanding  leases,  the  contract 
should  state  that  the  sale  is  subject  to  same.  Some  con- 
veyancers also  insert  a  clause  that  the  property  is  sold 
"  subject  to  monthly  tenancies  "  where  that  is  the  fact. 

»  Forms  44,  45,  Ch.  XL  infra. 


SUBJECT    MATTER   OP   CONTRACTS.  371 

If  property  is  sold  without  such  exceptions,  the  vendee 
may  insist  on  possession  of  the  property  without  any 
tenant  thereon  and  may  refuse  title  if  the  vendor  is  un- 
able to  deliver  the  property  vacant. 

§  361.    Price  and  Manner  of  Payment. 

The  total  price  to  be  paid  for  the  property  is  usually 
first  stated  and  then  follows  the  manner  in  which  pay- 
ment thereof  is  to  be  made.  Usually  a  fractional  amount 
is  paid  upon  signing  the  contract. 

Usually  the  property  is  taken  over  subject  to  an  out- 
standing mortgage,  or,  what  amounts  to  the  same  thing, 
a  ' '  trust  deed. ' '  The  details  of  such  a  mortgage  need  not 
be  stated,  for  it  is  held  that  the  mortgage  being  of  record, 
the  purchaser  is  chargeable  with  knowledge  or  notice  of 
its  provisions.  If  the  purchaser,  however,  wants  any  as- 
surance, he  may  require  that  the  details  of  the  mortgage 
be  given  in  the  contract,  in  which  case  the  contract  state- 
ments would  prevail. 

The  contract  of  sale  in  case  of  an  outstanding  mort- 
gage, usually  reads  that  the  property  is  to  be  taken  sub- 
ject to  a  mortgage,  but  sometimes,  without  any  reason 
therefor,  there  are  added  the  words,  "  which  mortgage 
the  purchaser  agrees  to  assume.'*  The  legal  effect  of  this 
phrase  seems  not  to  be  realized.  It  amounts  to  a  guar- 
antee on  the  purchaser's  part  of  full  payment  of  the  mort- 
gage. Thus  if  the  mortgage  is  assumed  by  the  purchaser, 
and  the  property  is  thereafter  foreclosed  and  sold,  and 
does  not  bring  enough  to  pay  the  costs  of  the  foreclosure 
and  the  amount  due  on  the  mortgage,  the  person  "  as- 
suming "  payment  of  the  mortgage  may  be  held  person- 
ally for  the  deficiency.  On  the  other  hand,  if  he  had 
taken  the  property  merely  "  subject  "  to  the  mortgage, 
no  resort  could  be  had  against  him  for  a  deficiency,  as  he 
personally  assumes  nothing,  the  mortgage  being  then  sup- 


372  CONTRACTS   FOR   SALE   OF    REAL   ESTATE. 

ported  entirely  by  the  property  and  by  any  preceding 
guarantors.4 

At  times,  the  purchase  price  of  property  is  paid  in 
part  by  the  purchaser  giving  back  to  the  seller  a  mort- 
gage for  an  agreed  amount.  Such  a  mortgage  is  called  a 
1 1  purchase  money  mortgage. ' '  Its  details  should  always 
be  stated  in  the  contract  of  sale.  If  they  are  not,  embar- 
rassing situations  may  arise,  not  necessary  to  be  set  forth 
here. 

In  agreeing  for  a  purchase  money  mortgage,  in  addi- 
tion to  the  principal  amount  of  the  mortgage,  the  follow- 
ing details  should  be  stated  in  the  contract:— Maturity 
of  the  mortgage;  rate  of  interest;  when  payable;  the  par- 
ticular clauses,  or  otherwise  that  the  mortgage  is  to  con- 
tain "  the  usual  clauses  "  in  addition  to  any  which  are 
particularized.  Also,  the  contract  should  specify  who  is 
to  pay  for  drawing  the  mortgage,  who  bears  the  cost  of 
recording  it,  and  who  is  to  pay  any  tax  there  may  be 
thereon. 

Where  the  total  amount  of  the  purchase  price  is  to  be 
paid  in  part  in  cash,  in  part  by  the  purchaser  taking  over 
the  property  subject  to  an  existing  mortgage  thereon, 
and  the  balance  by  the  seller  taking  back  a  purchase 
money  mortgage  on  the  property,  and  the  purchase 
money  mortgage  is  consequently  to  be  a  second  mort- 
gage,—that  is,  subordinate  in  lien  to  the  existing  mort- 
gage on  the  property,— the  purchase  money  mortgage, 
although  a  second  mortgage  lien  when  made,  would  as- 
cend to  the  position  of  a  first  mortgage  if  the  existing 
first  mortgage  is  later  paid  and  satisfied.  The  result 
would  be  that  the  purchaser  or  any  subsequent  owner  of 
the  property  could  not  obtain  a  new  mortgage  which 
would  be  prior  in  lien  to  the  purchase  money  mortgage 

*  The  above  Is  a  statement  of  the  general  rule.  Frequently  situations  arise  where 
the  purchaser  "assumes"  the  payment  of  the  mortgage,  hut  the  courts  will,  notwith- 
standing, refuse  to  enforce  the  apparent  liability.  The  legal  principles  applicable  to 
the  various  situations  must,  however,  be  sought  in  the  works  on  mortgages  and  cannot 
be  detailed  in  a  chapter  intended  to  present  only  suggestions  and  very  general  principles. 


SUBJECT    MATTER   OF    CONTRACTS.  373 

unless  the  then  holder  of  the  purchase  money  mortgage 
voluntarily  or  for  a  consideration  consented.  To  avoid 
this  situation,  it  is  quite  common  in  agreeing  for  a  pur- 
chase money  mortgage  which  is  to  remain  a  second  mort- 
gage lien,  to  insert  a  clause  in  the  contract  somewhat  as 
follows:  "Said  mortgage  is  to  contain  a  clause  subordi- 
nating the  same  to  any  new  first  mortgage  of  $ 

should  the  present  first  mortgage  at  any  time  be  satisfied, 
and  such  clause  shall  further  subordinate  said  mortgage 
to  any  new  first  mortgage  in  place  of  the  present  first 
mortgage,  provided  the  excess  of  such  new  first  mort- 
gage above  $ is  paid  to  the  holder  of  this  second 

mortgage  on  account  of  the  principal  sum,  and  that  the 
holder  of  such  second  mortgage  shall  execute,  acknowl- 
edge and  deliver  any  instruments  necessary  or  proper 
to  effectuate  such  subordination  as  above  agreed,  pro- 
vided he  shall  not  be  obliged  to  incur  any  expense  in  do- 
ing so  (or,  provided  he  shall  be  reimbursed  for  any 
expenses  he  may  incur  in  doing  so,  to  an  amount  not 
exceeding  $ ) . " 

§  362.    Suburban  Property. 

In  purchasing  suburban  property,  if  the  purchaser 
wishes  to  protect  himself  against  subsequent  assessments 
he  should  require  a  clause  in  the  contract  of  sale  stating 
that  the  sewer,  gas  and  water  are  in  the  streets  adjoining 
the  property  and  are  properly  connected  with  it,  and  that 
there  are  no  assessments,  instalment  or  otherwise,  against 
the  property. 

Not  infrequently  land  companies  purchase  acreage 
and  subdivide  it  into  lots.  Maps  are  made  of  the  prop- 
erty showing  it  laid  out  into  lots,  these  maps  sometimes 
being  accurate  and  made  by  a  competent  surveyor,  and  at 
other  times  lacking  either  or  both  of  these  desirable  qual- 
ities. Difficulty  sometimes  arises  with  this  suburban 


374  CONTEACTS   FOB   SALE   OF   REAL   ESTATE. 

property  when  the  municipality  or  the  town  in  which  the 
property  is  situated  subsequently  lays  out  streets,  the 
lines  of  which  do  not  coincide  with  the  streets  shown  on 
the  land  companies'  maps.  Many  of  these  maps  are  not 
filed  in  the  public  offices  at  all,  and  purchasers  must  then 
rely  on  a  map  which  is  in  the  possession  of  an  individual 
or  a  land  company. 

One  of  the  several  reasons  for  the  reluctance  to  file 
such  maps  is  found  in  the  fact  that  if  a  map  showing  the 
property  cut  up  into  lots  is  filed  in  a  public  office,  the  tax 
assessors  are  apt  to  assess  each  lot  separately,  whereas 
if  no  map  is  filed  the  property  is  assessed  in  one  parcel 
as  farm  land  or  woodland  or  meadows  as  the  case  may  be, 
and  the  belief  is  prevalent  and  has  some  foundation,  that 
the  tax  assessments  are  considerably  less  when  the  prop- 
erty is  assessed  as  a  farm  or  as  woodland  than  when  each 
lot  is  assessed  as  separately  laid  out. 

In  New  York  the  legislature  has  made  an  effort  to  reg- 
ulate the  filing  of  such  maps  by  an  act  which  became  a 
law  on  June  7,  1910.  This  law  makes  it  the  duty  of 
every  person  who,  or  corporation  which,  either  as  owner 
or  as  an  agent  cuts  up  property  into  lots  for  the  purpose 
of  offering  them  for  sale,  to  cause  a  map  to  be  filed,  and 
provides  a  penalty  for  failure  so  to  do.  The  law  is  an 
addition  to  the  New  York  Real  Property  Law,  and  in  full 
is  as  follows : 

"Sec.  334.  Maps  to  be  Filed;  Penalty  for  Nonfiling. 
It  shall  be  the  duty  of  every  person  or  corporation  who, 
as  owner  or  agent,  subdivides  real  property  into  lots, 
plots,  blocks  or  sites,  with  or  without  streets,  for  the  pur- 
pose of  offering  such  lots,  plots,  blocks  or  sites  for  sale 
to  the  public,  to  cause  a  map  thereof,  together  with  a  cer- 
tificate of  the  surveyor  or  draughtsman  attached  showing 
the  date  of  the  completion  of  the  survey  and  of  the  mak- 
ing of  the  map  and  the  name  of  the  subdivision  as  stated 
by  the  owner,  to  be  filed  in  the  office  of  the  county  clerk 


SUBJECT    MATTER   OF   CONTRACTS.  375 

or  register  of  deeds  of  the  county  where  the  property  is 
situated  prior  to  the  offering  of  any  such  lots,  plots, 
blocks  or  sites  for  sale.  All  of  such  maps  shall  be  placed 
and  kept  by  some  suitable  method,  in  consecutive  order 
and  shall  be  consecutively  numbered  in  the  order  of  their 
filing  and  shall  be  indexed  under  the  initial  letters  of  all 
substantives  in  the  title  of  the  subdivision.  A  failure  to 
file  any  such  map  as  required  by  the  provisions  of  this 
section  shall  subject  the  owner  of  such  subdivision,  or  of 
the  unsold  lots  therein,  to  a  penalty  to  the  people  of  the 
state  of  twenty-five  dollars  for  each  and  every  lot  therein 
sold  and  conveyed  by  or  for  such  owner  prior  to  the  due 
filing  of  such  map. ' ' 5 

§  363.    New  Buildings. 

In  purchasing  property  upon  which  buildings  have 
been  recently  erected,  it  is  safer  to  require  and  so  state 
in  the  contract  that  the  seller  at  the  time  of  the  delivery 
of  the  deed  will  produce  and  deliver  to  the  purchaser 
certificates  of  the  Tenement  House  Department,  if  such 
exist,  or  otherwise  of  a  corresponding  department,  if 
such  there  be,  showing  that  the  buildings  and  improve- 
ments on  the  property  have  been  inspected,  passed  and 
approved  by  the  department;  also  proper  certificates 
showing  the  right  to  have  the  property  occupied,  and  also 
showing  that  the  buildings  have  been  passed  on  and  ap- 
proved by  the  proper  building  department  or  bureau.  If 
the  property  is  not  "  tenement  "  property,  the  provision 
with  respect  to  the  Tenement  House  Department  is  of 
no  value  and  will  not  of  course  be  incorporated  in  the 
contract  for  sale,  but  the  building  department  clause 
should  be  included. 

§  364.    Time  for  Delivery  of  Deed. 

Ordinarily  the  purchaser  under  a  contract  for  sale  of 

»  N.  Y.  Laws  of  1910,  Ch.  415. 


376  CONTRACTS  FOB   SALE   OF   REAL   ESTATE. 

real  estate  is  accorded  thirty  days  in  which  to  complete 
his  purchase— that  is,  to  pay  the  balance  of  the  purchase 
money  and  accept  the  deed  of  the  property.  A  day  is 
fixed  for  the  purpose  and  this  day  is  usually  called  the 
"  closing  of  title,"  or  "  the  law  day."  The  day,  hour 
and  place  should  be  precisely  fixed.  The  form  of  the 
deed,  whether  warranty  or  otherwise,  should  be  stated.6 
The  contract  should  also  provide  that  the  rents,  interest 
on  mortgages  and  fire  insurance  premiums,  if  any,  are  to 
be  apportioned  or  otherwise  provided  for  as  may  be 
agreed  upon. 

§  365.    Fixtures. 

While  it  is  not  often  so,  it  is  a  fact  that  sometimes  a 
purchaser  suffers  keen  disappointment  when  he  sees  the 
condition  of  the  property  at  the  time  he  actually  takes 
it  over.  When  the  contract  was  signed  he  saw  many 
11  improvements  "  on  the  property  which  have  disap- 
peared when  he  takes  his  deed.  This  is  because  the 
vendor  has  meanwhile  removed  certain  "  fixtures." 
Usually  the  purchaser  has  no  redress. 

Although  not  a  strictly  correct  definition,  ' '  fixtures  ' ' 
in  popular  "  real  estate  language  "  usually  denote  such 
movable  articles  as  do  not  constitute  part  of  the  realty. 
Close  questions  sometimes  arise  as  to  whether  certain 
forms  of  property  are  fixtures  and  therefore  not  passed 
with  the  sale  of  the  real  estate,  or  whether  they  are  part 
of  and  pass  with  the  real  estate  itself.  The  vendor,  after 
he  has  made  a  contract  to  sell  his  real  estate,  may  law- 
fully remove  therefrom  such  property  as  shades,  awn- 
ings, chandeliers,  mirrors,  and  in  some  cases  even  gas 
ranges  and  similar  articles  not  permanently  affixed.  On 

•  We  are  not  unmindful  of  the  fact  that  there  are  cases  which  hold  that  a  stipu- 
lation to  give  a  warranty  deed  refers  only  to  the  form  of  the  deed  and  not  to  the  validity 
of  the  title.  Such  decisions  not  only  are  unreasonable,  but  have  been  rarely  followed. 
The  forms  of  contracts  given  in  Chapter  XXXIX  infra  contain  the  appropriate  words 
to  fully  cover  the  situation. 


SUBJECT    MATTER   OF   CONTRACTS.  377 

the  other  hand,  enterprising  vendors  are  sometimes  dis- 
appointed on  attempting  to  remove  laundry  tubs,  bath 
tubs,  wash  basins,  faucets,  heating  boilers  and  water 
pipes,  to  learn  that  these  are  parts  of  the  realty  and  pass 
with  the  property.  Even  as  to  these  articles,  however, 
questions  have  arisen  where  the  vendor  had  purchased 
them  under  what  is  known  as  ' '  a  conditional  sale, ' '  i.  e., 
a  credit  sale  where  the  seller  of  the  goods  retains  title 
until  full  payment  has  been  made.  The  only  safe  plan, 
therefore,  is  to  have  a  general  and  inclusive  provision  in 
the  contract  for  sale,  stating  that  carpets  in  halls,  chan- 
deliers, gas  fixtures,  shades,  awnings  and  the  like,  "  are 
included  in  this  sale. ' ' 

§  366.    Approval  Clause. 

In  modern  contracts  for  sale  of  real  estate,  especially 
in  the  large  cities,  there  is  usually  inserted  what  is  known 
as  an  "  approval  clause."  This  innocent  looking  clause 
usually  provides  that  ' '  the  seller  shall  give  and  the  pur- 
chaser shall  accept  such  a  title  as  "  a  specified  or  "  any 
responsible  "title  guarantee  company  "  will  approve  and 
insure. ' ' 

Under  somewhat  similar  clauses  the  courts  were  for- 
merly quite  unanimous,  although  possibly  not  wholly  so, 
that  before  the  title  could  be  disapproved,  there  must  be 
a  reasonable  foundation  or  basis  for  the  disapproval, 
but,  in  New  York  at  least,  the  more  recent  decisions  are 
quite  unanimous  that  under  such  a  clause  the  specified 
title  company  may  arbitrarily  refuse  to  approve  and  in- 
sure the  title  and  that  this  is  sufficient  ground  to  justify 
the  vendee  in  refusing  to  accept  the  same  unless  the  ap- 
proval is  prevented  by  the  purchaser's  own  act. 

We  shall  not  discuss  the  question  as  to  whether  it  is 
the  vendor's  or  the  vendee's  duty  to  obtain  the  approval 
or  disapproval  of  the  title  under  such  a  clause,  although 


378  CONTRACTS   FOR   SALE   OF   REAL   ESTATE. 

that  too  has  been  an  interesting  controversy.  Convey- 
ancers generally  favor  the  view  that  if  the  purchaser 
wishes  to  refuse  the  title,  it  is  incumbent  upon  him  to 
obtain  the  disapproval  thereof  by  the  specified  company 
and  that  he  does  not  have  the  right  to  refuse  to  accept 
the  title  merely  because  the  vendor  has  not  obtained  the 
title  company  'a  approval.  The  '  *  approval  clause  ' '  men- 
tioned is  considered  beneficial  to  the  purchaser.  The 
vendor  rarely  derives  any  benefit  therefrom. 

§  367.    General  Provisions. 

Other  clauses  of  more  or  less  obvious  desirability  are 
usually  found  in  the  printed  forms  of  contract.  None  of 
them  require  special  mention  here. 

Such  standard  clauses  are  based  on  legal  principles, 
as  for  instance  the  clause  that  the  vendor  assumes  the 
risk  of  loss  or  damage  by  fire  until  the  delivery  of  the 
deed.  After  the  contract  is  entered  into  and  signed,  the 
purchaser  acquires  certain  equitable  rights  and  also  re- 
sponsibilities, and  as  the  seller  usually  retains  the  fire 
insurance  policies  until  actual  delivery  of  the  deed,  the 
clause  referred  to  is  inserted  in  the  contract  to  place 
definitely  the  liability  for  any  loss  occasioned  by  fire. 

The  general  rule  is  that  the  vendee  in  a  contract  for 
the  sale  of  land  is  entitled  to  any  benefits  or  improve- 
ments inuring  to  the  land  after  the  date  of  the  contract, 
and  must  bear  any  losses  by  fire  or  otherwise  which  occur 
without  the  fault  of  the  vendor.  This  applies  when  the 
title  is  satisfactory  and  the  contract  is  capable  of  being 
specifically  performed  by  the  vendor.  Such  is  the  Eng- 
lish rule,  and,  although  a  contrary  view  is  taken  in  some 
jurisdictions,  the  great  weight  of  authority  is  in  its  favor.7 
The  English  rule  is  followed  in  equity,  and  where  the 

T  Sewell  v.  Underbill,  197  N.  Y.  168  (1910),  where  Am.  &  Eng.  Ency.  of  Law, 
Vol.  29  (2d  Ed.),  p.  713,  Is  referred  to. 


SUBJECT    MATTER   OF    CONTRACTS.  379 

doctrine  is  maintained  it  is  upon  the  theory  that  the  con- 
tract makes  the  vendee  the  equitable  owner,  and  courts 
of  equity  regard  that  which  is  agreed  to  be  done  as  actu- 
ally performed.  The  reason  for  the  provision  in  the  con- 
tract definitely  providing  upon  whom  the  loss  shall  fall 
in  case  of  fire,  is  therefore  obvious. 


PART    VH.— SCHEDULES    AND    FORMS. 


CHAPTER   XXXVIII. 

BROKERS'    RULES.     SCHEDULES   OF   FEES, 
CHARGES   AND   COMMISSIONS. 

Form  1.— Schedule  of  Charges  and  Commissions.    New 
York  City.1 

(a)  KEGULATIONS  AS  TO  PRIVATE  SALES. 

The  following  commissions  shall  be  chargeable  on  private  sales,  except 
where  a  special  contract  has  been  previously  made: 
For  selling  real  estate  within  the  limits  of  New  York  and 

Brooklyn    1     % 

Leaseholds 2     % 

For  selling  real  estate  in  the  suburbs  of  New  York,  Brooklyn, 

and  country  property 2%% 

Western  and  Southern  lands 5     % 

Selling  leases  and  leaseholds  in  the  suburbs  of  New  York. ...         5     % 
Procuring  loans,  1%  or  by  agreement. 

In  the  case  of  exchanges,  a  full  commission  shall  be  paid  on  each  side. 
No  sales  shall  be  made  for  a  commission  of  less  than  $25. 

Should  the  title  of  property  prove  imperfect,  whereby  a  sale  cannot  be 
consummated,  the  claim  for  commission  shall  not  be  invalidated  thereby. 

Brokerage  shall  be  deemed  to  be  earned  when  the  price  and  terms  are 
arranged  between  buyer  and  seller,  the  minds  of  both  parties  having  fully 
met.  It  shall  be  due  and  payable  when  the  contract  is  signed. 

(b)  KEGULATIONS  AS  TO  AGENTS  AND  MANAGEMENT  OF  PROPERTY. 

The  following  commissions  shall  be  charged  for  the  management  and 

letting  of  property,  except  where  a  special  contract  has  been  previously 
made: 
Eenting  for  a  term  under  3  years  on  first  year's  rental,  or 

fraction  thereof 2%% 

Leasing  for  a  term  of  three  years  and  upward  on  gross  rental, 

except  by  special  agreement 1     % 

Leasing  country  property,  first  year 5     % 

Each  subsequent  year,  to  same  party 2^% 

On  renting  and  collecting,  except  by  special  agreement 5     % 

(c)  APPRAISEMENT  CHARGES. 

For  appraising  real  estate  in  the  Boroughs  of  Manhattan,  Bronx  and 
Brooklyn,  from  $10  to  %  of  1%  upon  valuation,  or  according  to  agreement. 
Suburban  property,  %  of  1%,  or  according  to  agreement. 

1  These  rates  are  given  on  page  15  of  the  diary  (1909)  published  by  the  Real 
Kstate  Board  of  Brokers  of  the  City  of  New  York.  See  page  28  thereof  as  to  fees 
for  appraisals.  For  commissions  on  auction  sales  see  pages  34,  35,  same  book. 

380 


BROKERS'  RULES.      SCHEDULES  OF  FEES,  ETC.        381 

Form  2.— Schedule  of  Salesroom  Fees  and  Commissions 
at  Auctions.    New  York  City.1 

(a)  REGULAR  SALESROOM  FEES. 

Knockdowns  on  all   real  estate $  5 

Auctioneers  not  renting  stands  to  pay  double  rate $10 

(b)  LEGAL  SALES  FEES. 

Knockdowns  on  all  sales  of  real  estate  by  order  of  the  court. .         $  2 

Salesroom  fees  on  property  offered  at  upset  prices  shall  be  the  same 
as  if  sold.  In  all  cases  where  property  is  offered  at  an  upset  price  and  not 
sold,  or  where  the  property  is  bid  in  by  the  owner,  or  on  his  behalf,  the  auc- 
tioneer shall  so  inform  the  manager  immediately  after  the  sale. 

(c)  COMMISSIONS  ON  AUCTION  SALES. 

Commissions  on  sales  of  real  estate  shall  be  as  follows,  viz:  On  New 
York  and  Brooklyn  property,  not  less  than  *£  of  1%,  to  be  paid  by  the 
seller,  in  addition  to  the  expense  of  maps,  advertising  and  salesroom  fees; 
and  no  member  of  the  association  shall  be  allowed  to  divide  this  commission 
with  any  person  except  a  real  estate  broker  bringing  a  sale  direct. 

On  country  property  and  leasehold  property,  wherever  situated,  the 
commission  shall  be  not  less  than  1%,  to  be  paid  by  the  seller,  in  addition 
to  the  expense  of  maps,  advertising  and  salesroom  fees. 

The  purchaser  shall  also  pay  the  auctioneer's  fee  of  $20  on  each  num- 
bered lot,  except  on  sales  of  property  producing  less  than  $1,000,  when  the 
fee  shall  not  be  less  than  $10  on  each  lot. 

All  legal  sales  shall  be  at  the  legal  rate,  viz:  $15  auction  fee  and  $2 
salesroom  fee,  to  be  paid  by  the  purchaser. 

The  auctioneer  shall  be  entitled  to  his  commission  on  any  real  estate 
advertised  by  him  and  sold  by  the  owner  previous  to  the  day  of  sale,  the 
same  as  if  sold  at  auction. 


Form  3.— Schedule  of  Fees,  Charges  and  Commissions. 
Brooklyn,  New  York.2 

(a)  APPRAISALS. 

Lots  25x100  feet  or  less,  plot  of  one  to  3  lots $15 

Each  additional  lot  up  to  10  lots,  additional $  5 

Over  10  lots,  by  special  arrangement. 

Private  Houses,  25  x  100  feet  or  less $15 

Each  additional  lot  or  fraction  thereof,  additional $  5 

Tenements  and  Flats,  25  x  100  feet  or  less $20 

Each  additional  lot  or  fraction  thereof,  additional $10 

Elevator  Apartments,  25  x  100  feet $25 

Each  additional  lot  or  fraction  thereof $10 

Loft  Buildings,  Factories,  Stables,  25x100  feet $25 

Each  additional  lot  or  fraction  thereof,  additional $10 

Office  Buildings,  Hotels,  Apartment  Hotels,  Business  Build- 
ings, rate  by  special  arrangement. 

1  The  fees  and  commissions  given  in  this  schedule  for  auctioning  real  estate  are 
those  adopted  hy  the  Real  Estate  Auctioneers'  Association  of  the  City  of  New  York. 

1  The  rates  piven  in  this  schedule  are  those  adopted  by  the  Brooklyn  Board  of 
Real  Estate  Brokers. 


382  SCHEDULES   AND   FORMS. 

(b)  SALES. 

City  Property  within  old  limits,  on  price  obtained 1     % 

No  commission  of  less  than  $100  to  be  charged  unless 
specially  agreed  upon. 

City  Property  outside  limits  of  old  city  lines  (or  as  may  be 
agreed  upon)    

Country  Property  (or  as  may  be  agreed  upon)    

(c)  LEASES. 

One  year  

One  to  five  years  on  the  first  year 's  rent 

Each  additional  year  1     %. 

Country  Property,  one  year  (or  as  may  be  agreed  upon  for 

term  leases)    5     % 


Form  4.— Schedule  of  Salesroom  Fees  and  Commissions 
at  Auctions.    Brooklyn,  New  York.1 


(a)  EXCHANGE  FEES. 

Knockdown  on  real  estate ;  to  auctioneers  renting  stands ...  $     2 

Knockdown  on  real  estate;  to  auctioneers  not  renting  stands.  $     6 

Knockdown  on  all  sales  of  real  estate  by  order  of  the  court . .  $     2 
Auctioneers'  stands  terms  per  annum,  from  May  1,  payable 

in  advance  quarterly $100 

(b)  COMMISSION  ON  AUCTION  SALES. 

The  commission  on  auction  sales  of  real  estate  shall  be  as  follows,  viz. : 
On  New  York  and  Brooklyn  property,  %  of  1%,  and  on  country  property, 
1%,  to  be  paid  by  the  seller,  in  addition  to  the  expense  of  maps,  advertis- 
ing, and  salesroom  fees.  The  purchaser  shall  also  pay  the  auctioneer's  fee 
of  not  less  than  $15,  except  on  sales  of  property  producing  less  than  $1,000, 
when  the  fee  shall  not  be  less  than  $10  on  each  lot.  All  legal  sales  shall 
be  at  the  legal  rates,  viz :  $15  auction  fee  and  $2  salesroom  fees,  to  be  paid 
by  the  purchaser. 


Form  5.— Rental  and  Management  Charges.    Chicago, 
Illinois.2 


(a)  BY-LAWS.    SECTION  I. 

For  negotiating  leases  for  business  and  residence  property  where  rents 
are  not  collected  by  the  agent,  and  where  buildings  are  already  erected,  but 
not  including  ground  leases. 

RULE  1.  WHERE  TERM  is  Six  MONTHS  OR  LESS.  Where  the  term  of 
the  lease  is  six  (6)  months  or  less,  charge  seven  per  cent.  (7%)  on  an 
amount  equal  to  six  (6)  months'  rental.  (See  Eule  3.) 

1  The  fees  and  commissions  given  in  this  schedule  are  those  adopted  by  the  Brook- 
lyn Real  Estate  Exchange. 

-  The  fees,  charges  and  commissions  of  Forms  5-8  are  taken  from  Article  XII  of 
the  By-laws  of  the  Chicago  Real  Estate  Board,  Sections  I-VII,  as  revised  to  1910. 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        383 

RULE  2.  WHKRE  TERM  is  MORE  THAN  Six  MONTHS  AND  DOES  NOT 
EXCEED  Two  YEARS.  Where  the  term  is  more  than  six  (6)  months  and 
does  not  exceed  two  (2)  years,  charge  five  per  cent.  (5%)  on  an  amount 
equal  to  one  year's  rental.  (See  Rule  3.) 

RULE  3.  IF  MONTHLY  RENTALS  ARE  NOT  UNIFORM.  If  the  monthly 
tentals  are  not  uniform  throughout  the  entire  term  of  any  lease  coming 
under  the  provisions  of  Rules  1  and  2,  the  average  monthly  rental  for  the 
actual  period  of  the  lease  shall  be  used  as  the  basis  for  computation. 

RULE  4.  WHERE  TERM  EXCEEDS  Two  YEARS.  Where  a  term  exceeds 
two  (2)  years  use  as  a  basis  charge,  five  per  cent.  (5%)  and  add  for  each 
six  (6)  months  or  fraction  thereof  over  two  (2)  years,  one-half  (%)  of 
one  per  cent.  (1%),  which  rate  shall  be  figured  on  one  (1)  average  year's 
rental  of  the  entire  term. 

RULE  5.  WHAT  TO  CHARGE  IF  LEASE  CALLS  FOR  A  NET  RENTAL.  In 
figuring  commissions  to  be  charged  on  leases  where  the  rental  to  be  re- 
ceived by  the  Lessor  is  net,  that  is  to  say,  where  the  Lessee  agrees  to  pay 
taxes  and  fire  insurance  premiums,  in  addition  to  the  rental  named  in  the 
lease,  the  annual  rental  upon  which  to  compute  commissions  shall  be  the 
net  rental  plus  the  amount  of  the  annual  taxes  and  estimated  fire  insurance 
premiums;  the  intention  being  to  make  the  charge  on  the  same  basis  as  if 
the  Lessor  paid  same  and  made  the  lease  on  the  usual  gross  basis. 

How  TO  ESTIMATE  TAXES  AND  INSURANCE  PREMIUMS  WHERE  LEASE 
CALLS  FOR  NET  RENTAL.  As  it  will  be  impossible  to  correctly  judge 
what  the  future  taxes  and  insurance  premiums  will  be  during  the  term  of 
a  lease,  the  amount  of  the  taxes  last  paid,  or  to  be  paid  (if  possible  of 
being  ascertained)  on  the  property,  shall  be  used  as  a  basis  for  computa- 
tion. As  such  leases  obviously  state  the  amount  of  fire  insurance  to  be 
carried  on  the  property  at  the  expense  of  the  Lessee,  and  an  approximate 
insurance  rate,  contemplating  the  tenant  in  possession,  can  easily  be  ob- 
tained from  the  Underwriters  as  to  the  insurance  rate  at  the  time  the  lease 
is  made,  the  same  shall  be  used  as  a  basis  for  computation. 

RULE  6.  WHEN  LEASE  CONTAINS  PRIVILEGE  OF  RENEWAL.  When  the 
lease  gives  the  Lessee  a  privilege  of  renewal,  the  charge  shall  be  made  for 
the  actual  term  of  the  lease.  If  the  Lessee  later  avails  himself  of  the  priv- 
ilege of  renewal,  whether  strictly  according  to  the  terms  expressed  in  the 
lease  or  not,  the  agent  shall  also  be  entitled  to  a  commission  on  the  ex- 
tended period.  This  additional  commission  shall  be  the  difference  between 
the  amount  of  commission  due  for  the  entire  term,  including  the  extended 
period,  and  the  amount  of  commission  previously  paid.  The  additional 
commission  shall  be  paid  the  agent  at  the  time  of  renewal. 

RULE  7.  WHERE  RENEWAL  OF  LEASE  is  NEGOTIATED  BY  AGENT.  Where 
renewals  of  leases  are  negotiated  and  the  agent  does  not  collect  the  rent,  he 
shall  charge  the  regular  rates  prescribed  in  this  Section,  the  same  as  if  the 
leases  were  negotiated  with  new  tenants. 

RULE  8.  MINIMUM  CHARGE  FOR  LEASING  RESIDENCE  PROPERTY.  The 
minimum  charge  to  be  made  in  any  case  for  leasing  residence  property  shall 
be  Ten  Dollars  ($10). 

RULE  9.  WHERE  LEASE  CONTAINS  OPTION  TO  PURCHASE.  Should  there 
be  a  clause  in  the  lease  giving  the  Lessee  an  option  to  purchase  the  property 
demised,  whether  or  not  the  purchase  is  made  exactly  .on  the  terms  stipu- 
lated in  the  lease,  the  owner  shall  pay  the  agent  who  negotiated  the  lease 
two  and  one-half  per  cent.  (2%%)  on  the  purchase  price,  to  be  paid  when 
the  sale  is  closed.  (See  Rule  35.) 


384  SCHEDULES   AND   FORMS. 

(b)  BY-LAWS.    SECTION  II. 

Charges  for  negotiating  leases  which  contemplate  the  erection  of  new 
buildings. 

EULE  10.  WHERE  LEASE  CONTEMPLATES  ERECTION  OF  NEW  BUILDING. 
The  charge  for  negotiating  leases  which  contemplate  the  erection  of  a 
building  for  a  tenant,  shall  be  two  and  one-half  per  cent.  (2%%)  on  the 
value  of  the  land  as  calculated  in  the  making  of  the  lease,  and  two  and  one- 
half  per  cent.  (2*£%)  on  the  cost  of  the  proposed  building  and  appurte- 
nances. 

Charges  for  procuring  tenants  under  the  conditions  mentioned  in  the 
foregoing  Sections  1  and  2  are  to  be  made  at  the  rates  stipulated,  unless 
there  shall  have  been  a  previous  agreement  between  the  owner  and  the  agent 
for  the  collection  of  rent. 

(c)  BY-LAWS.    SECTION  III. 

Charges  for  management  of  property  where  agent  collects  the  rent, 
makes  leases,  repairs,  etc. 

RULE  11.  CHARGES  FOR  STORE,  Loir,  OFFICE,  RESIDENCE  OR  OTHER 
PROPERTY.  For  renting  and  collecting  rents  regardless  of  the  character, 
use  or  location  of  the  property,  charge  five  per  cent.  (5%)  on  collections, 
unless  special  or  extraordinary  services  are  required,  when  an  additional 
charge  may  be  made  which  will  be  commensurate  with  the  service  ren- 
dered. 

RULE  12.  For  office  and  residence  property,  wherever  located,  charge 
five  per  cent.  (5%)  on  collections. 

RULE  13.  CHARGE  ON  DISBURSEMENTS.  In  the  management  of  prop- 
erty under  this  Section  the  agent  shall  be  entitled  to  charge  on  disburse- 
ments as  follows,  to  wit:  On  amounts  paid  out  for  taxes  on  improved  prop- 
erty, one  per  cent.  (1%)  and  on  unimproved  property  two  and  one-half  per 
cent.  (2^%),  no  charge  to  be  less  than  One  Dollar  ($1).  Members  shall 
have  the  right  to  charge  for  special  services  not  contemplated  under  ordi- 
nary agency. 

RULE  14.  For  negotiating  new  leases  and  for  the  renewals  of  old 
leases  the  charge  shall  be  in  accordance  with  the  circumstances  and  services 
performed,  and  shall  be  in  addition  to  the  amount  expended  for  advertising. 

RULE  15.  WHEN  COLLECTION  OF  RENTS  is  WITHDRAWN.  Where  the 
collection  of  rents  on  property  is  withdrawn  from  an  agent,  such  agent 
shall  be  entitled  to  charge  for  the  unexpired  term  of  any  leases  he  may 
have  made  or  renewed  during  his  agency,  at  the  rates  specified  in  Section  1 
hereof. 

RULE  16.  AGENTS  MAY  TAKE  MANAGEMENT  ON  OTHER  BASIS.  Agents 
may  take  the  management  of  buildings  and  charge  the  regular  Board  rates 
for  making  new  leases  as  prescribed  in  Sections  1  and  2  hereof,  and  in  their 
discretion  reduce  the  charge  hereinbefore  provided  in  this  Section  for  rent- 
ing and  collecting.  This  policy  is  recommended  to  members  for  the  reason 
that  it  places  them  in  position  to  pay  commissions  to  other  brokers  who  may 
assist  them  in  making  leases. 

RULE  17.  FOR  THE  TRANSFER  OR  ASSIGNMENT  OF  LEASES.  For  trans- 
ferring or  assigning  leases  the  charge  shall  be  in  proportion  to  the  service 
rendered,  but  in  no  event  shall  same  be  less  than  Five  Dollars  ($5)  for 
leases  on  residence  property  and  Fifteen  Dollars  ($15)  for  leases  on  busi- 
ness property. 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        385 
Form  6.— Charges  for  Ground  Leases.    Chicago,  Illinois. 

BY-LAWS.    SECTION  IV. 

The  following  charges  shall  be  made  for  ground  leases,  whether  the 
agent  is  managing  and  collecting  rents  on  the  property  at  the  time  of 
making  lease  or  not. 

RULE  18.  WHERE  THE  TERM  is  SEVEN  YEARS  OR  LESS.  For  making  an 
original  lease,  or  a  sub-lease  thereof,  where  the  term  of  lease  is  seven  (7) 
years  or  less,  charge  in  accordance  with  Section  1  of  this  Article. 

RULE  19.  WHERE  THE  TERM  is  OVER  7  AND  DOES  NOT  EXCEED  15 
YEARS.  For  making  an  original  lease,  or  a  sub-lease  thereof,  where  the 
term  of  lease  is  over  seven  (7)  and  does  not  exceed  fifteen  (15)  years, 
charge  on  the  total  rent  for  the  term  two  per  cent.  (2%). 

RULE  20.  WHERE  TERM  EXCEEDS  15  YEARS.  For  making  an  original 
lease,  or  a  sub-lease  thereof,  where  the  term  of  lease  exceeds  fifteen  (15) 
years,  charge  on  the  value  of  the  ground  as  determined  by  capitalizing  the 
annual  ground  rental  on  a  four  per  cent.  (4%)  basis,  two  and  one-half 
per  cent.  (2%%). 

PROVISION  (A)  OF  RULE  20.  IF  ANNUAL  GROUND  RENT  is  Nor  UNI- 
FORM. If  the  annual  ground  rental  during  the  entire  term  of  the  lease  is 
not  uniform,  the  charge  shall  be  made  on  the  value  of  the  land  as  deter- 
mined by  the  average  annual  ground  rental  capitalized  as  aforesaid. 

PROVISION  (B)  OF  RULE  20.  IF  LEASE  CONTAINS  PROVISION  FOR  RE- 
APPRAISEMENT.  If  the  lease  contains  a  clause  providing  for  reappraisement 
of  the  ground  by  appraisers  during  the  term  of  the  lease,  the  average  an- 
nual rental  between  the  date  of  lease  and  the  date  set  for  the  first  appraise- 
ment shall  be  taken  as  the  basis  on  which  to  compute  the  total  rental  for  the 
entire  term. 

RULE  21.  IF  OTHER  CONSIDERATION  is  PAID  BY  LESSEE  IN  ADDITION  TO 
KENT.  In  any  case,  if  cash  or  other  consideration  is  paid  in  addition  to 
the  ground  rent,  the  amount  of  such  cash,  or  value  of  such  consideration, 
shall  be  added  to  and  become  a  part  of  the  capitalized  value  on  which 
the  charge  shall  be  figured. 


Form  7.— Commissions  on  Sales.    Chicago,  Illinois. 

BY-LAWS.    SECTION  V. 

Charges  for  making  sales  of  Real  Estate. 

RULE  22.    On  a  sale  of  $2,000  or  less,  5%,  but  no  charge  shall  be  less 

than  $25. 

RULE  23.    On  a  sale  over  $2,000  up  to  and  including  $3,000 $120 

RULE  24.    On  a  sale  over  $3,000  up  to  and  including  $4,000 140 

RULE  25.    On  a  sale  over  $4,000  up  to  and  including  $5,000 160 

RULE  26.    On  a  sale  over  $5,000  up  to  and  including  $6,000. 180 

RULE  27.    On  a  sale  over  $6,000  up  to  and  including  $7,000 200 

RULE  28.    On  a  sale  over  $7,000  up  to  and  including  $8,000 220 

RULE  29.    On  a  sale  over  $8,000  up  to  and  including  $9,000 240 

RULE  30.     On  a  sale  over  $9,000  up  to  and  including  $10,000 250 

RULE  31.     On  a  sale  exceeding  $10,000 2%% 

The   above   schedule  does  not  apply  to   the   handling  of   subdivisions 

where  the  charge  shall  be  a  matter  of  contract. 


386  SCHEDULES   AND   FORMS. 

BULK  32.  SELLING  ACRE  AND  FARM  PROPERTY.  In  selling  or  exchang- 
ing acre  property,  outside  of  Cook  County,  or  farm  lands  located  in  said 
County,  the  charge  shall  be  five  per  cent.  (5%). 

RULE  33.  SELLING  LEASEHOLDS.  For  selling  Leaseholds  of  buildings, 
or  parts  thereof,  charge  for  the  unexpired  term  of  the  lease  the  same  rates 
as  are  provided  in  Section  I1,  as  if  a  new  lease  were  made,  plus  20  per  cent. 
of  the  bonus. 

For  selling  Ground  Leases  and  Improvements,  charge  4  per  cent,  on  the 
amount  of  the  sale  price  of  the  leasehold  interest  and  improvements,  plus 
\Vz  per  cent,  on  the  value  of  the  ground  as  determined  by  capitalizing  on  a 
4  per  cent,  basis  the  annual  ground  rental  being  paid  at  the  time  of  sale. 

RULE  34.  EXCHANGES.  In  case  of  exchanges  of  property,  a  full  com- 
mission, based  upon  the  sale  price,  shall  be  paid  by  each  party,  the  same  as 
if  a  sale  of  each  property  had  been  made. 

RULE  35.  WHAT  SHALL  CONSTITUTE  SALE  PRICE.  All  charges  herein 
provided  for  the  sale  or  exchange  of  real  estate  and  the  sale  of  leaseholds 
and  buildings,  shall  be  based  upon  the  sale  price,  meaning  thereby  that  if 
the  sale  is  made  subject  to  a  mortgage  or  mortgages  the  sale  price  shall  be 
construed  to  mean  the  price  of  the  equity,  plus  the  encumbrances. 


Form  8.— Loan  Charges  and  Valuation  Fees.    Chicago, 

Illinois. 


(a)  BY-LAWS.    SECTION  VI. 

RULE  36.  REAL  ESTATE  LOANS.  On  Real  Estate  Loans  the  mortgagor 
shall  pay  two  and  one-half  per  cent.  (2%%)  on  the  amount  of  the  loan, 
and  in  addition  thereto  the  attorney's  fees  for  the  examination  of  title,  Re- 
corder's fees  for  recording  the  necessary  loan  papers,  and  the  cost  of 
Guaranty  Policy,  and  of  continuation  of  the  Abstract  of  Title  brought  down 
to  include  the  record  of  the  deed  securing  the  loan. 

RULE  37.  RENEWAL  OF  LOANS.  For  renewal  of  loans  the  mortgagor 
shall  pay  at  the  same  rate  as  provided  in  the  preceding  paragraph  of  this 
Section. 

(b)  BY-LAWS.    SECTION  VII. 

For  making  valuations  on  real  estate,  members  shall  not  charge  less 
than  the  following  amounts: 

On  amounts  not  exceeding  $10,000,  charge  $25. 

On  amounts  over  $10,000  and  not  exceeding  $30,000,  charge  $25  on  the 
first  $10,000  and  $2  per  thousand  on  excess,  up  to  and  including  $30,000. 

On  all  amounts  over  $30,000  and  not  exceeding  $200,000,  $1  per  thou- 
sand on  excess  over  $30,000  with  a  further  charge  of  75  cents  per  thousand 
on  amounts  over  $200,000. 

The  above  are  the  minimum  fees  to  be  charged  for  ordinary  valuation 
services,  but  where  a  member  is  called  upon  to  make  a  special  valuation  he 
shall  charge  according  to  the  service  rendered. 

1  See  Form  5  supra. 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        387 

Form  9.— Brokers'  Rules,  Fees,  Charges  and  Commis- 
sions.   Cook  County,  Illinois.1 


EULES  AND  KEGULATIONS. 


The  members  of  the  Cook  County  Real  Estate  Board  are  requested  not 
to  advertise  or  offer  to  sell  or  loan  money  on  real  estate  without  commis- 
sion. 

All  applicants  for  Active  Membership  in  the  Cook  County  Real  Estate 
Board  shall  be  regular  licensed  brokers. 

No  member  shall  solicit  business  from  owners  represented  by  other 
members  of  the  Cook  County  Real  Estate  Board,  by  offering  less  than  Real 
Estate  Board  rates  of  commission,  rebates  or  other  money  inducements. 

It  is  the  duty  of  a  member  having  a  purchaser  or  applicant  for  the 
purchase,  lease  or  loan  of  premises  represented  by  another  member  under 
authorization  of  the  owner,  to  communicate  with  such  member  whose  agency 
is  known  or  ascertained  while  negotiations  are  in  progress,  and  negotiate  the 
sale,  lease  or  loan  through  such  agent  member,  and  the  duty  is  reciprocal 
on  the  part  of  the  member  having  the  agency  of  the  property  to  negotiate 
with  a  member  bringing  a  purchaser  or  applicant  for  lease  or  loan,  and  in 
either  case  to  make  satisfactory  arrangements  for  division  of  commissions. 

The  following  resolution  was  passed  by  the  members  of  the  Cook 
County  Real  Estate  Board  at  their  meeting  held  November  10,  1908: 

' '  RESOLVED  :  That  it  is  the  sense  of  the  Cook  County  Real  Estate  Board 
that  the  best  results  in  selling  Chicago  real  estate  are  obtained  by  placing 
the  sale  exclusively  with  one  broker,  and  the  Members  of  this  Board  stand 
pledged  to  render  each  other  active  assistance  in  selling  property  listed 
exclusively  with  any  member  of  this  Board. ' ' 

SCHEDULE  OF  COMMISSIONS  AND  CHARGES. 


(a)  COMMISSIONS  FOR  MAKING  SALES  OF  REAL  ESTATE  IN  COOK  COUNTY,  ILL. 

(1)  On  a  sale  of  $500  or  less,  $25. 

(2)  On  a  sale  of  $500  to  $2,000,  5%  of  sale  price. 

(3)  On  a  sale 

Over  $2,000  up  to  and  including  $  3,000 $120 

Over  $3,000  up  to  and  including  $  4,000 $140 

Over  $4,000  up  to  and  including  $  5,000 $160 

Over  $5,000  up  to  and  including  $  6,000 $180 

Over  $6,000  up  to  and  including  $  7,000 $200 

Over  $7,000  up  to  and  including  $  8,000 $220 

Over  $8,000  up  to  and  including  $  9,000 $240 

Over  $9,000  up  to  and  including  $10,000 $250 

(4)  On  a  sale  exceeding  $10,000,  2V2%. 

The  commission  charged  shall  be  upon  the  total  sale  price,  and  not  upon 
the  owner's  equity. 

(5)  SUBDIVISION.     On  the  sale  and  management  of  subdivision  prop- 
erty, where  the  owner  does  the  advertising  and  pays  such  general  expenses 
as  may  be  necessary  for  placing  the  property  upon  the  market,  the  charge 
for  selling  lots  shall  be  not  less  than  5%.     Where  the  collections  of  the 

1  These  rules,   schedules  of  commissions   and   charges   for  handling   real  estate  were 
adopted  by  the  Cook  County   (Illinois)   Real  Estate  Board,  October  12,   1909. 


388  SCHEDULES   AND   FORMS. 

contracts  are  left  with  the  agent,  a  collection  fee  of  not  less  than  3%  shall 
be  charged. 

(6)  LANDS.  For  selling  land  or  other  real  estate  located  outside  of 
Cook  County,  not  less  than  5%. 

(b)  NET  PRICES. 

When  an  owner  agrees  with  an  agent  in  writing  to  offer  property  for 
sale  at  a  price  net  of  commissions  to  the  broker,  it  is  understood  that  all 
sums  secured  over  and  above  said  price  by  or  through  said  broker  during 
the  time  that  said  price  is  given,  shall  be  paid  over  to  said  agent  as  pay- 
ment in  full  for  commissions  and  services  rendered. 

(c)  EXCHANGES. 

(1)  In  the  case  of  exchanges  of  property,  a  full  commission  shall  be 
paid  by  each  party,  based  upon  the  consideration  for  the  respective  pieces  of 
property  so  exchanged,  the  same  as  if  a  sale  had  been  made,  in  accordance 
with  the  rates  established  herein. 

(2)  Exchanging  lands  or  other  real  estate  located  outside  of  Cook 
County,  not  less  than  5%. 

(d)  LEASEHOLDS. 

(1)  SELLING   OR   LOANS.     The   commission  for  selling  leaseholds   or 
making  loans  on  leaseholds  shall  be  1%%  in  addition  to  the  present  rate 
established  for  the  sale  of  or  loans  on  real  estate  in  Cook  County. 

(2)  EXCHANGING.     For  exchanges  of  leaseholds  in  or  out  of  Cook 
County,  5%. 

(e)  FEES  FOR  VALUATION. 

On  all  amounts  up  to  $15,000,  $25. 

On  amounts  from  $15,000  to  $100,000  the  fee  shall  be  $25  on  the  first 
$15,000,  and  $1  per  thousand  on  excess  up  to  $100,000,  with  a  further 
charge  of  fifty  cents  per  thousand  on  amounts  over  $100,000. 

(f )  PLACE  OF  CLOSING  SALE. 

All  sales  shall  be  closed  at  the  office  of  the  agent  representing  the  owner 
of  the  property. 

(g)  MANAGEMENT  AND  COLLECTION  OF  BENTS. 

(1)  For  negotiating  and  making  leases  or  for  the  renewal  of  old 
leases,  in  addition  to  the  amount  expended  for  advertising,  the  charge  shall 
be  in  accordance  with  the  circumstances  and  service  performed,  the  minimum 
charge  to  be  $3. 

The  owner  is  to  pay  for  all  advertising  connected  with  renting  the 
property. 

(2)  For  renting  and  collecting  on  buildings  used  as  stores  and  lofts 
when  occupied  by  one  tenant,  and  the  rents  exceed  $1,000  per  annum,  not 
less  than  2%%. 

(3)  Where  annual  rental  is  less  than  $1,000,  5%. 

(4)  When  occupied  by  more  than  one  tenant,  5%. 

(5)  Office  and  residence  property,  5%. 

(6)  Commissions  are  to  be  charged  on  the  total  rents  collected. 

(7)  It  is  understood  that  when  the  collection  of  rents  on  property  is 
not  left  with  the  agent  for  a  full  year,  he  shall  be  entitled  to  charge  for 
any  lease  he  may  have  made  or  renewed,  at  the  rate  specified  herein  "for 
negotiating  and  making  leases  where  rents  are  not  collected  by  agent." 

(h)     FOR  DISBURSEMENTS. 

(1)  In  the  management  of  property  the  agent  shall  be  paid  on  dis- 
bursement for  janitor  service,  coal,  repairs  and  all  expenses  (except  irisur- 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        389 

ance,  taxes  and  interest)  2%%.    The  above  charge  shall  not  be  made  when 
an  agent  is  receiving  5%  for  collection  of  rents. 

(i)     FOB  PAYMENT  OP  TAXES. 

(1)  On  unimproved  property,  on  amount  of  taxes  paid,  2%%.  On 
improved  property,  on  amount  paid,  1%.  No  charge  to  be  made  less  than  $1. 

For  preparing  affidavits,  drawing  leases,  deeds  or  other  documents,  a 
charge  of  not  less  than  $3  shall  be  made. 

(j)     FOB  NEGOTIATING  AND  MAKING  LEASES  WHEN  RENTS  ABE  Nor  COL- 
LECTED BY  AGENT. 

(1)  Stores,  business,  residence  and  flat  property,  lease  not  exceeding 
one  year,  charge  on  amount  of  the  yearly  rental  of  5%. 

(2)  Where  the  term  exceeds  one  year,  add  to  the  foregoing  1%  of 
the  rental  for  each  additional  year. 

(3)  Where  the  term  is  less  than  twelve  months  and  more  than  six 
months,  charge  the  same  as  if  the  lease  had  been  made  for  one  year.    Where 
the  term  is  six  months  or  less,  charge  5%  on  an  amount  equal  to  six  months' 
rental  at  the  rate  at  which  the  lease  is  made. 

(4)  The  minimum  charge  to  be  made  in  any  case  for  leasing  stores, 
residence  or  flat  property,  $10. 

(k)     GBOUND  LEASES. 

(5)  Ground  lease,  term  of  fifteen  years  or  less,  on  total  rent  covered 
by  lease,  2y2%. 

Where  property  is  subject  to  re-appraisal  during  the  life  of  lease, 
the  charge  is  to  be  computed  for  the  full  term,  on  basis  of  the  average 
rental  for  the  first  five  years. 

(6)  Ground  leases  exceeding  fifteen  years,  on  the  appraised  value  of 
property,  at  date  of  making  lease,  2%%.     If  more  than  one  appraisal,  or 
if  an  agreed  increase  of  rents  at  stated  periods  without  appraisal  is  men- 
tioned in  the  lease,  then  said  increase  is  to  be  treated  as  a  revaluation  of 
the  property,  and  the  percentage  is  to  be  figured  on  an  average  of  said 
appraised  value. 

(7)  Should  there  be  a  clause  in  the  lease  giving  the  lessee  an  option 
to  purchase  the  property,  and  he  should  avail  himself  of  said  option,  the 
owner  is  to  pay  the  agent  2V£%  on  the  purchase  price  paid,  when  sale  is 
closed. 

(8)  Where  the  tenant  has  privilege  for  "renewal"  expressed  in  lease, 
it  is  to  be  understood  that  the  owner  of  property  shall  pay  the  agent  making 
such  lease  a  commission  for  said  renewal  at  the  same  rate  as  though  it 
was  a  new  lease.    This  commission  is  to  be  paid  at  the  time  of  the  renewal. 

(9)  Where  owner  erects  building:     The  rate  of  commission  for  ne- 
gotiating leases  where  owner  erects  building  or  buildings,  for  a  tenant, 
shall  be  2%%  on  the  value  of  the  land,  and  2y2%  on  the  cost  of  the  im- 
provement.   Charges  for  procuring  tenants  are  to  be  made  at  the  foregoing 
rates,  unless  there  shall  have  been  a  previous  agreement  with  the  agent  that 
he  shall  collect  the  rent. 

(1)     TRANSFERBING  LEASES. 

For  the  transferring  of  leases  on  any  premises,  from  one  tenant  sub- 
letting to  another,  a  rate  of  2%%  of  the  total  balance  due  on  such  unex- 
pired  lease  shall  be  charged  to  the  tenant  subletting,  with  a  minimum 
charge  of  $3. 

(m)     REAL  ESTATE  LOANS. 

(1)  On  loans  of  $1,000  or  more  on  improved  store,  flat  or  residence 
property,  not  less  than  21/>%  on  amount  of  loan,  and  in  addition  thereto, 
attorney's  fees  for  examination  of  title,  fees  for  extra  services  rendered 
by  attorney  or  broker  in  matter  of  completing  loan;  recorder's  fee  for  re- 


390  SCHEDULES   AND   FORMS. 

cording  the  necessary  documents,  and  the  cost  of  a  complete  abstract  of  title 
brought  down  to  include  the  deed  securing  the  loan,  or  a  guarantee  policy 
in  lieu  of  abstract  continuation. 

(2)  On  loans  below  $1,000  on  improved  store,  flat  or  residence  prop- 
erty, from  2y^%  to  5%  on  amount  of  loan;   the  minimum  commission  to 
be  $15. 

(3)  On  loans  on  unimproved  property,  5%  on  amount  of  loan;   the 
minimum  commission  to  be  $20. 

(4)  On  building  loans  of  $1,000  or  more,  2%%  to  3*£%  on  amount 
of  loan,  and  a  reasonable  fee  for  extra  service. 

(5)  On  building  loans  below  $1,000,  3%  to  5%  and  a  reasonable  fee 
for  extra  service;  the  minimum  commission  to  be  $25. 

(6)  On  loans  outside  of  Cook  County,  or  outside  of  the  State  of  Illi- 
nois, 5%  on  amounts  of  $1,000  or  more,  and  from  5%  to  7%  on  amounts 
below  $1,000;  the  minimum  commission  to  be  $25. 

(7)  On  loans  on  theatres,  .churches,  factories,  livery  stables,  storage 
and  warehouses  and  other  properties,  not  specifically  classified,  from  2%% 
to  5%. 

(8)  The  commission  for  renewals  of  all  loans  shall  be  at  the  same  rate 
as  when  loan  was  originally  made. 

(9)  The -rate  of  discount  for  purchase  of  real  estate  mortgage  paper 
to  be  the  same  as  the  rate  established  for  making  new  loans. 

(10)  Commission  to  brokers  placing  loans  with  other  brokers  in  no 
case  over  1%  on  amount  of  loan. 

(n)  BUYER'S  AGENT. 

Where  a  broker  is  employed  to  purchase  real  estate,  he  shall  receive 
from  the  party  so  employing  him  the  same  commission  on  the  amount  of  the 
purchase  as  though  he  were  employed  by  the  seller  in  the  sale  of  said 
premises. 

Where  an  agent  represents  a  tenant  or  lessee  for  the  purpose  of  leasing 
any  premises,  he  shall  be  entitled  to  the  same  commission  or  charges  from 
said  tenant  or  lessee  as  though  he  represented  the  owner  or  lessor  in  the 
leasing  of  said  premises. 

(o)  AUCTION  SALES. 

For  the  sale  of  real  estate  at  auction,  the  same  commissions  shall  be 
charged  as  herein  provided  for  the  making  of  sales  of  real  estate  in  or  out- 
side of  Cook  County,  and  in  addition  thereto  the  owner  to  pay  all  expenses  of 
advertising  and  conducting  the  auction  sale.  Commission  fee  to  be  paid 
on  all  property  at  the  time  of  sale. 

When  property  is  advertised  for  sale  at  auction  and  is  sold  by  the  owner 
previous  to  the  day  of  sale,  or  thirty  days  thereafter,  the  agent  shall  never- 
theless be  entitled  to  his  commisssion. 

(p)  EXPERT  TESTIMONY. 

A  minimum  fee  of  $25  shall  be  charged.  For  attendance  at  court,  a 
fee  of  $10  to  $100  per  day  shall  be  charged,  payable  in  advance. 

(q)   SALESMEN. 

Any  member  of  the  Cook  County  Eeal  Estate  Board  employing  a  sales- 
man, shall  request  a  reference  from  the  former  employer. 

When  a  salesman  is  under  contract  or  indebted  to  any  other  member  of 
the  Cook  County  Real  Estate  Board,  such  salesman  shall  not  be  accepted 
or  employed  until  an  offer  has  been  made  by  him  to  adjust  his  differences 
to  the  satisfaction  of  said  other  member. 

It  is  understood  that  where  a  salesman  is  employed  on  "a  commission 
basis"  that  all  sums  advanced  to  said  salesman  shall  be  charged  against  all 
commissions  that  may  be  earned  by  him,  and  in  the  event  of  his  resignation 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        391 

or  discharge,  all  such  sums  charged  to  him  shall  immediately  become  due  and 
payable. 

Where  a  salesman  is  employed  on  "a  guarantee  basis"  and  has  failed 
to  earn  a  sum  sufficient  to  pay  the  amount  paid  to  him,  in  the  event  of  his 
resignation  or  discharge,  all  such  sums  paid  to  said  salesman  shall  be  con- 
sidered as  salary  for  services. 

When  two  or  more  salesmen  are  employed  upon  any  one  particular  deal, 
the  commission  shall  be  credited  as  follows: 

Salesman  representing  the  purchaser  shall  be  credited  with  an  interest 
in  50%  of  the  total  commission. 

Salesman  representing  the  seller  fhall  be  credited  with  an  interest  in 
50%  of  the  total  commission. 

Where  a  salesman  is  employed  on  a  commission  basis,  he  should  be 
allowed  a  listing  fee  for  all  property  listed  by  him,  in  the  event  that  same 
is  sold  within  six  months  from  date  of  listing  by  said  salesman,  through  the 
office  he  is  connected  with  (with  the  understanding  that  his  information  and 
particulars  were  of  use  in  effecting  a  sale). 

Such  listing  fee  shall  be  not  more  than  5%  of  the  sale  commission  re- 
ceived. 10%  of  the  sale  commission  received  should  be  allowed  if  property 
is  listed  exclusively  and  the  sale  is  made  through  the  office  he  is  connected 
with.  Sale  to  be  made  during  the  term  of  exclusive  agency. 

The  5%  and  10%  credit,  however,  to  be  allowed  and  earned  only  in  the 
event  that  the  salesman  does  not  effect  the  sale  nor  benefits  in  any  other  way 
in  sale  commissions. 

When  a  salesman  resigns  or  is  discharged  by  the  office  he  has  been 
associated  with,  all  previous  or  pending  business  shall  remain  the  property 
of  said  office. 

(r)  FORMS  OF  CONTRACTS,  ETC. 

Forms  of  contracts  and  other  approved  papers  shall  be  prepared  under 
the  direction  of  the  Directors,  and  be  offered  for  sale  to  all  members,  who 
will  be  requested  to  use  the  same  in  conducting  their  business.1 

(s)  DEPOSITS,  EARNEST  MONEY  AND  ESCROWS. 

On  the  sale  or  lease  of  real  estate  a  deposit  of  5%  to  10%  of  the  con- 
sideration shall  be  deposited  by  the  purchaser  at  the  time  of  signing  and 
delivering  of  the  contract,  and  same  shall  be  held  in  escrow  by  the  agent 
representing  the  owner.  In  case  a  deposit  is  forfeited  by  the  purchaser  the 
whole  thereof,  except  the  commission  of  the  agent  negotiating  the  sale  or 
lease,  together  with  the  expense  connected  therewith,  shall  belong  to  and  be 
paid  over  to  the  owner  of  the  property. 

In  the  event  that  the  earnest  money  in  contract  is  deposited  with  other 
than  the  agent  representing  the  owner,  all  charges  for  making  said  escrow 
shall  be  paid  for  by  the  party  requesting  the  escrow. 

(t)  DIVISIONS  OF  COMMISSIONS. 

When  two  brokers  are  interested  in  a  sale,  the  commission  shall  be 
divided  as  follows: 

50%  to  the  broker  representing  the  purchaser. 

50%  to  the  broker  representing  the  seller. 

When  two  brokers  are  interested  in  an  Exchange,  the  Commission  shall 
be  divided  as  follows: 

Each  broker  to  receive  50%  of  the  total  commission  received  from  both 
sides  of  the  exchange. 

Wlit-n  two  or  more  brokers  are  interested  in  one  end  of  a  sale  or  Ex- 
change, the  brokers  representing  that  end  shall  divide  50%  of  the  Com- 
mission received  between  such  two  or  more  brokers. 

1  See  Forms  18,  37  infra. 


392  SCHEDULES   AND    FORMS. 

Form  10.— Schedule  of  Fees,  Charges  and  Commissions. 
Philadelphia,  Pa.1 

(a)  COMMISSIONS  ON  SALES. 

Improved  property  in  the  City  of  Philadelphia 1% 

Unimproved    property 2% 

(b)  MORTGAGES. 

Obtaining    first    mortgages. 1% 

Obtaining  second  mortgages,  amounts  fixed  by  agreement. 

(c)  APPRAISALS. 

The  fees  for  appraising  property  are  generally  a  matter  of  agreement 
between  the  parties,  or  if  it  is  a  matter  which  concerns  the  Court,  the  fee  is 
fixed  by  the  Judge. 


Form  11.— Schedule  of  Fees,  Charges  and  Commissions. 
St.  Louis,  Missouri.2 

(a)  COMMISSIONS  AND  CHARGES. 

In  the  absence  of  an  agreement  to  the  contrary  between  the  parties 
concerned,  the  following  schedule  of  commissions  and  charges  shall  obtain 
with  respect  to  all  transactions  between  members  made  upon  the  floor  of  the 
Exchange. 

SEC.  1.  On  private  purchases  and  sales  of  real  estate,  where  the  amount 
involved  is  $1,000  or  less,  $25;  where  the  amount  exceeds  $1,000,  2*£  per 
cent. 

SEC.  2.  On  auction  sales  the  seller  to  pay  2^  per  cent,  and  in  addition 
thereto  all  expenses  of  conducting  the  sale,  except  the  auctioneer's  fee. 
Commissions  to  be  paid  on  all  property  knocked  down  at  the  sale.  Where 
property  is  bought  by  an  agent  at  auction  sale  for  a  client,  $10  where 
amount  involved  is  $2,000  or  less;  %  per  cent,  where  amount  involved  is 
over  $2,000  and  under  $10,000,  and  ^  of  1  per  cent,  where  amount  involved 
exceeds  $10,000. 

(b)  LOANS. 

SEC.  3.  On  all  loans  of  $1,000  or  less,  a  commission  of  $25  shall  be 
paid  by  the  borrower,  and  on  all  loans  of  more  than  $1,000,  2%  per  cent. 
If  an  agent  shall  make  an  application  for  a  loan  which  shall  be  accepted, 
the  borrower  shall  be  liable  for  the  foregoing  commissions  whether  he  shall 
in  fact  accept  the  loan  or  not. 

(c)  LEASEHOLDS. 

SEC.  4.  On  a  leasehold  from  thirty  to  ninety-nine  years,  2^  per  cent, 
on  valuation  of  property ;  from  twenty  to  thirty  years,  2  per  cent. ;  from  ten 
to  twenty  years,  l1^  per  cent.;  from  one  to  ten  years,  1  per  cent,  of  gross 
rental;  on  annual  leases  for  $2,500  per  annum  or  less,  $25.  The  value  of  a 
leasehold  is  to  be  determined  by  capitalizing  the  annual  rental  upon  a  basis 
of  4%  per  cent. 

1  This  information  is  supplied  by  Mr,  Frederick  M.   Pile,  a  member  of  the  Board  of 
Directors  of  the  Philadelphia  Real  Estate  Brokers'  Association. 

2  From  Article  VI  of  the  By-laws  of  the  St.  Louis  Real  Estate  Exchange. 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        393 

(d)  COLLECTION  OP  RENTS. 

SEC.  5.  Where  monthly  rent  of  one  tenant  is  less  than  $100,  5  per 
cent.;  if  in  excess  of  $100,  3  per  cent. 

(e)  APPRAISEMENT. 

SEC.  6.  Where  property  appraised  at  $1,000  or  less,  $10;  if  over  $1,000 
and  less  than  $10,000,  1  per  cent.,  and  %  per  cent,  on  every  additional 
$1,000  up  to  $100,000;  and  *4  of  1  per  cent,  on  every  thousand  in  excess  of 
$100,000. 


Form  12.— Rules  and  Regulations  of  the  St.  Louis  Real 
Estate  Exchange. 

(a)  AUCTION  ROOM  FEES — ORDINABY  SALES — CHARGES  FOR  USE  OF  AUCTION 
ROOM. 

Second. — Knockdown  on  real  estate,  when  the  aggregate  amount  is  less 
than  $5,000,  $5. 

Between  the  sums  of  $5,000  and  $20,000,  $10. 

All  above  $20,000,  50  cents  for  each  $1,000  in  excess. 

Commissions  on  sales  of  real  estate  at  auction  in  this  Exchange  shall 
be  the  same  as  adopted  in  the  by-laws.  When  property  is  advertised  for  sale 
at  auction  and  is  sold  by  the  owner  previous  to  the  day  of  sale,  the  agent 
shall  nevertheless  be  entitled  to  his  commission. 

(b)  JUDICIAL  SALES. 

Fourth. — All  judicial,  sheriff  and  trustee's  sales  may  be  held  on  the 
floor  of  the  Exchange  free  of  charge,  and  in  such  instances  the  same  facil- 
ities for  selling  and  posting  notices  shall  be  accorded  to  non-members  as  to 
members. 

(c)  AUCTION  SALES. 

Fifth. — No  auctioneer  shall  raise  a  bid,  and  he  shall  not  countenance 
any  fictitious  bidding,  or  by-bidding,  or  any  practice  calculated  to  deceive 
bidders  at  auction  sales,  or  to  impose  a  fictitious  value  on  property  offered 
for  sale. 

Sixth. — Any  auctioneer  violating  the  above  rule,  and  the  persons  repre- 
senting him,  shall  be  liable  to  expulsion  or  suspension  of  privileges. 

Seventh. — When  property  is  offered  at  auction  under  special  conditions, 
announcement  of  the  same  must  be  made  before  the  sale  by  the  agent  or 
auctioneer. 


Form  13.— Schedule  of  Fees,  Charges  and  Commissions. 
Boston,  Massachusetts.1 


(a)  SALE  OR  PURCHASE. 

Boston  Proper — $10,000    or   less 

Over  $10,000   and   up  to   $30,000,  2%%   on 

1  Schedule  of  rates  adopted  April  14.  1890  by  the  Board  of  Directors  of  the  Real 
Estate  Exchange  and  Auction  Board  (Boston),  as  amended  March  14,  1892;  March  9, 
1903 ;  October  8,  1906.  and  March  20,  1907.  These  rules  prevail  In  the  absence  of 
special  agreement. 


394  SCHEDULES   AND   FORMS. 

$10,000  and  %   of  1%  on  each  $1,000  and 

fraction  thereof  exceeding  $10,000. 

$30,000  or  over 1  % 

Suburbs  (See  Note) 2*4% 

Elsewhere,  the  customary  local  charges. 

(b)  EXCHANGES. 

Commissions,  as  above,  paid  by  both  parties. 

(c)  MORTGAGES. 

Boston  Proper — $10,000    or   less 2     % 

Over  $10,000  and  up  to  $30,000,  2%  on  $10,- 
000  and  y2  of  1%  on  each  $1,000  and 
fraction  thereof  exceeding  $10,000. 

$30,000  or  over 1     % 

Suburbs    (See    Note) 2     % 

Second    Mortgages 2     % 

(Note)  SUBURBS  include  South  and  East  Boston,  Charlestown,  Box- 
bury,  West  Eoxbury,  Brighton,  and  Dorchester. 

BOSTON  AND  ROXBURY  LINES. — The  southerly  lines  of  estates  abutting 
on  the  southerly  side  of  Massachusetts  avenue  from  the  Eoxbury  canal  to 
the  Providence  railroad  location  and  of  Buggies  street  and  the  Fenway  from 
said  railroad  location  to  Brookline  avenue,  thence  across  the  Biverway  to  the 
centre  line  of  St.  Mary's  street. 

(d)  LEASES. 

Under  three  years,  on  amount  of  first  year's  rent 2%% 

Three  years,  or  over,  on  gross  amount  of  rent 1     % 

(e)  EXTENSIONS  OF  LEASES. 

For  extensions  of  leases  provided  for  in  original  instruments,  if  availed 
of  by  original  lessees  or  their  assigns,  full  leasing  commissions  to  brokers 
negotiating  such  original  instruments,  payable  upon  effect  of  such  exten- 
sions by  such  lessees;  provided  that  the  total  commissions  paid  for  original 
leases  and  extensions  shall  not  exceed  in  amount  a  commission  chargeable 
for  the  entire  term  covered  by  the  original  lease  and  its  extensions. 

(f)  RENEWALS  OF  LEASES. 

To  brokers  negotiating  original  leases  and  employed  for  renewals,  with- 
out increase  of  rental  over  that  named  in  the  original  leases,  one-half  the 
regular  leasing  commissions  payable  upon  such  renewals;  when  rental  is 
increased,  full  leasing  commissions. 

(g)  SALES  UNDER  OPTIONS. 

To  the  broker  negotiating  a  lease  containing  an  option  of  sale,  if  option 
is  availed  of,  full  commissions  for  both  lease  and  sale,  but  not  to  exceed  in 
amount  the  commissions  chargeable  upon  the  total  amount  received  by  the 
owner  from  both  sale  and  lease. 

(h)  CARE  AND  MANAGEMENT  OF  ESTATES. 

On  amount  of  rent  collected 5     % 

(i)  MINIMUM  CHARGE. 

For  sale,  mortgage  or  lease „ $25 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        395 

Form  14.— Commission  Rate   Schedule.     Jersey   City, 
New  Jersey.1 


The  following  Commission  Rates  and  Conditions  will  govern  until  written 
notice  of  change  is  promulgated  by  the  Association. 

(a)  FOB  THE  RENTING  AND  COLLECTING  OF  RENTS  OF  PROP- 
ERTY OF  INDIVIDUALS,  ESTATES,  ETC.,  with  sole  charge 
upon  the  distinct  understanding  that  the  engagement  is 
made  by  the  year,  and  for  a  term  of  not  less  than  one 

year    5     % 

and  that  in  case  of  change  of  management  before  the  year  ends,  full 
commission  is  to  be  paid  on  the  advance  rents  for  the  balance  of  year 
on  all  agreements,  if  by  month  or  year,  and  on  unexpired  leases  a  rental 
commission  is  to  be  paid  to  their  expiration  at  the  schedule  rates. 
Special  Agreements  may  be  made  to  collect  rents  on  leases,  if  same  have 
been  made  independent  of  member 's  office. 

(b)  FOR  LOOKING  AFTER  REPAIRS,  TAXES,  WATER  RENTS,  INSURANCE,  IN- 
TEREST, ETC.,  and  for  the  payment  of  the  same,  special  rates  may  be 
made. 

(c)  FOR  RENTING  OR  LEASING  Dwellings,  Business  and  other 
City  property,  when  rented  for  one  year  or  less,  and  the 

annual  rent  is  under  $300 $7.50 

When  rented  for  less  or  more  than  one  year,  and  not  ex- 
ceeding five  years,  and  the  annual  rent  is  $300  or 
over,  on  the  year  or  term  rent 

When  rented  for  a  term  exceeding  five  years,  on  the  gross 
rent  for  the  exceeding  term 

If  there  is  a  hold  over,  a  renewal,  or  privilege  given  for 
renewal  or  renewals,  and  the  option  is  taken,  on  the 

gross  rent  for  the  term  or  terms 

Country  Property  on  like  conditions 5     % 

Commissions  Payable  by  the  landlord  when  the  agreement  is  complete  or 

lease  is  executed. 
If  Members'  Bill  Is  Put  Up,  one-half  commission  will  invariably  be  charged 

if  the  premises  are  hired  by  the  occupant. 
One-Half  the  above  rates  will  in  all  cases  be  charged  if  the  premises  are 

rented  by  the  owner,  or  by  any  other  agent  or  broker,  unless  by  special 

agreement  otherwise. 

No  Charge  Made  for  Drawing  Ordinary  Leases. 
There  is  Objection  to  Taking  Houses  or  other  property  to  rent  that  are 

offered  by  other  agents  unless  by  special  arrangements,  as  much  annoy- 
ance is  avoided  to  the  owner,  the  occupant  and  those  looking. 
Owners  having  property   registered   on   members'  books   are  requested  to 

notify  them  at  once  in  case  they  rent  or  lease  the  property  themselves, 

or  through  other  agents  or  brokers. 
Positively  no  Refusal  will  be  given  of  any  property  unless  by  authority  of 

owner,  and  no  charge  is  made  for  registering  property,  if  nothing  is 

done. 
For  Attendance  on  Cases  in  Court,  the  charge  will  be  a  reasonable  fee  and 

costs. 

1  Schedule  adopted  by  the  Board  of  Real  Estate  Brokers  of  Jersey  City  and  Vicin- 
ity,  September  29,    1903. 


396  SCHEDULES   AND   FORMS. 

(d)  FOE  SALES  OR  EXCHANGES  OF  CITY  PROPERTY,  when  the 

purchase  money  does  not  amount  to  $1,000 $25 

When  the  purchase  money  amounts  to  $1,000  or  over,  on 

the  gross  amount  of  sale 

Water  Front  and  Country  Property,  on  the  gross  amount  of 

sale 5     % 

Laws  N.  J.  Sales,  G.  S.,  Page  1604,  S.  10: 

"No  broker  or  real  estate  agent,  selling  or  exchanging  land  for  or  on 
account  of  the  owner,  shall  be  entitled  to  any  commission  for  the  sale  or 
exchange  of  any  real  estate,  unless  the  authority  for  selling  or  exchanging 
such  land  is  in  writing,  and  signed  by  the  owner  or  his  authorized  agent,  and 
the  rate  of  commission  on  the  dollar  shall  have  been  stated  in  such 
authority. ' ' 
In  Exchanges  of  property  full  commission  shall  be  paid  on  each  side  as  per 

schedule. 
Commissions  Payable  by  seller  when  contract  is  signed;   full  commissions 

will  be  charged  seller  if  sales  are  made  from  information  obtained 

through  a  member's  office. 

A  Defective  Title  will  not  invalidate  claim  for  commission. 
No  Charge  is  Made  for  Registering  Property  for  Sale. 
Owners  having  property  registered  on  members'  books   are  requested   to 

notify  them  at  once  in  case  they  effect  a  sale  themselves  or  through 

other  agents  or  brokers. 

(e)  FOR  NEGOTIATING  MORTGAGES  OR  OBTAINING  LOANS  on 
City  or  Country  Property,  commissions  fixed  by  statute, 

Search  Fees  and  Expenses  additional  and  per  annum. .     %  of  1% 

(f)  FOR  APPRAISAL  OF  CITY  PROPERTY,  Lot  or  House  and 

Lot,   at   member 's   office $5  to  $10 

When  personal  examination  is  required,  and  the  valua- 
tion is  under  $4,000,  expenses  and $10 

When  personal  examination  is  required,  and  the  valua- 
tion is  $4,000  or  over,  expenses  and %  of  1% 

Country  Property  on  the  valuation,  expenses  and 1% 

(g)  OFFICIAL   APPRAISEMENTS  by   an  Appraisal  Committee 
of  the  Association  will  be  made  on  request  to  the  Asso- 
ciation at  their  headquarters,  and  a  certificate  issued. — 

Minimum  charge  for  Committee  Appraisal 

Minimum  charge  for  Single  Member 's  Appraisal 

Appraisement  Fees  and  Expenses  are  payable  in  advance,  except  on 

personal  examinations,  then  a  deposit,  and  balance  on  receipt  of 
valuation  in  writing. 

(h)  FOR  AUCTION  SALES  OF  REAL  ESTATE,  advertising  ex- 
penses, adjusted  to  suit,  and  on  the  gross  amount  of  sale  Ito2%% 

(i)  OF  SECURITIES,  advertising  expense  of  $2  per  block,  $3 

minimum  commission  charge,  and  on  the  par  or  over. .     %  of  1% 

(j)  OF  PERSONAL  PROPERTY,  advertising  expenses  ($5  mini- 
mum commission  charge),  and  on  the  gross  amount  of 
sale  .  10% 


BROKERS'  RULES.     SCHEDULES  OF  FEES,  ETC.        397 

Form  15.— Schedule  of  Brokers'  Commissions.    Denver, 
Colorado.1 

(a)  COMMISSION  ON  SALES. 

5%  on  first  $2,500;  2%%  on  the  excess. 

(b)  COMMISSION  ON  EXCHANGES. 
Subject  to  agreement. 

(c)  COMMISSION  ON  LOANS. 
In  the  City  of  Denver,  2% 

Outside  the  City  of  Denver,  as  per  agreement. 

(d)  COMMISSION  ON  EENTALS  AND  LEASES. 

Stores,  business  property,  residence  property  and  ground  leases: 

(1)  Lease  not  exceeding  five  years,  charge  on  amount  of  total  rental, 
2%. 

Where  term  exceeds  five  years,  charge  2%  for  first  five  years,  and  1% 
for  each  additional  annual  rental  up  to  and  including  a  period  of  twenty- 
five  years.  For  all  time  in  excess  of  twenty-five  years,  %  of  1%.  If  annual 
rental  (as  in  some  ground  leases)  is  subject  to  change  through  reappraisal 
at  various  periods,  the  commission  to  be  based  on  average  annual  rental  for 
first  ten  years.  The  same  charge  to  apply  on  assignment  or  sale  of  a  lease. 
All  commissions  payable  on  execution  or  assignment  of  lease. 

A  minimum  charge  to  be  made  in  any  case  for  leasing  property  shall  be 
$5. 

A  charge  of  not  less  than  $2.50  shall  be  made  for  making  or  checking 
over  inventory  of  furnished  house. 

(2)  Should  there  be  a  clause  in  the  lease  giving  the  lessee  an  option  to 
purchase  the  property,  and  should  he  avail  himself  of  said  option,  the  owner 
is  to  pay  the  agent  commission  in  full  for  a  real  estate  sale,  provided  com- 
mission already  paid  does  not  equal  or  exceed  amount  of  the  sale  com- 
mission. 

(3)  Where  a  tenant  has  privilege  for  "renewal"  expressed  in  lease,  it 
is  to  be  understood  that  the  owner  of  the  property  shall  pay  commission  for 
said  rental  at  the  same  rate  as  though  the  lease,  when  first  written,  had 
covered  the  whole  term.     This  commission  is  to  be  paid  at  the  time  of  the 
renewal. 

(4)  For  procuring  tenant  on  "monthly  tenancy,"  20%  of  first  month's 
rent.    In  no  case  shall  the  charge  be  less  than  $1. 

(5)  For  leasing  of  property  and  collection  of  rents,  a  charge  of  not  less 
than  5%  shall  be  made  on  all  collections.    $1  per  month  to  be  the  minimum 
charge  to  any  one  property  owner. 

Form  16.— Schedule  of  Fees,  Charges  and  Commissions. 
San  Francisco,  California.2 

(a)  TERM  LEASE. 

2%%  of  first  year's  rent,  and  1^%  of  each  year's  rent  thereafter. 

(b)  MONTHLY  LEASE. 

10%  of  first  month's  rent. 

i  In  force  under  the  rule  of  the  Denver  Real  Estate  Exchange  on  January  1.   1910. 
'The    San    Francisco   Real    Estate   Board    states    that    this    is    the   only   schedule   of 
rates  adopted   by   that   Board. 


CHAPTER   XXXIX. 

FORMS   OF   CONTRACTS   FOR   SALE   OF 
|  REAL   ESTATE.1 

Form  17.— Contract  of  Sale.    New  York  City. 

CONTRACT  OF  SALE. 


AGREEMENT,  made  and  dated  October  1st,  1910,  between  EXECUTIVE 
REALTY  COMPANY,  a  corporation  incorporated  under  the  laws  of  the  State  of 
New  York,  hereinafter  described  as  the  seller,  and  WILMOT  R.  WETMORE,  of 
the  City  of  Boston,  State  of  Massachusetts,  hereinafter  described  as  the 
purchaser; 

WITNESSETH:  That  in  consideration  of  the  sum  of  Twenty- five  Thou- 
sand, Six  Hundred  Dollars  ($25,600)  to  be  fully  paid  as  hereinafter  men- 
tioned, the  seller  hereby  agrees  to  sell  and  convey,  and  the  purchaser  hereby 
agrees  to  purchase,  ALL  that  certain  plot,  piece  or  parcel  of  land,  with  the 
buildings  and  improvements  thereon  erected,  situate,  lying  and  being  in  the 
Borough  of  Manhattan,  City,  County  and  State  of  New  York,  known  as 
No.  901-903  Grant  Avenue,  and  bounded  and  described  as  follows:  BE- 
GINNING at  a  point  on  the  Northerly  side  of  Grant  Avenue  distant  seventy- 
five  (75)  feet  Easterly  from  the  corner  formed  by  the  intersection  of  the 
Northerly  side  of  Grant  Avenue  with  the  Easterly  side  of  Madison  Street, 
and  running  thence  Northerly,  parallel  with  Madison  Street  and  part  of  the 
distance  through  a  party  wall,  one  hundred  (100)  feet;  thence  Easterly  and 
parallel  with  Grant  Avenue,  fifty  (50)  feet;  thence  Southerly  and  again 
parallel  with  Madison  Street  and  part  of  the  distance  through  another  party 
wall,  one  hundred  (100)  feet  to  the  Northerly  side  of  Grant  Avenue,  and 
thence  Westerly  and  along  the  Northerly  side  of  Grant  Avenue,  fifty  (50) 
feet  to  the  point  or  place  of  beginning; 

TOGETHER  with  all  the  right,  title  and  interest  of  the  seller  of,  in  and  to 
the  street  or  avenue  in  front  of  and  adjacent  to  said  premises  to  the  centre 
line  thereof; 

SUBJECT  to  covenants  and  restrictions,  and  railroad  consents,  if  any; 
and  also  subject  to  monthly  tenancies  and  any  state  of  facts  an  accurate 
survey  would  show. 

The  price  is  Twenty-five  Thousand,  Six  Hundred  Dollars  ($25,600), 
payable  as  follows: 

Six  Hundred  Dollars  ($600)  on  the  signing  of  this  contract,  the  receipt 
of  which  is  hereby  acknowledged ; 

Five  Thousand  Dollars  ($5,000)  in  cash  or  certified  check  on  the  de- 
livery of  the  deed  as  hereinafter  provided ; 

Thirteen  Thousand  Dollars  ($13,000)  by  the  purchaser  taking  said  prem- 
ises subject  to  a  mortgage  for  that  amount,  now  a  lien  on  said  premises,  the 
principal  of  which  mortgage  became  due  December  1,  1909,  and  bears  in- 
terest at  five  per  cent,  payable  May  1st  and  November  1st  of  each  year; 

1  See  Chs.  XXXVI  and  XXXVII,  supra. 


CONTRACTS   FOR   SALE   OF   REAL   ESTATE.  399 

Seven  Thousand  Dollars  ($7,000)  by  the  purchaser  (or  his  assigns) 
executing  and  delivering  to  the  seller  a  bond  for  that  amount,  and  also  a 
purchase  money  mortgage  for  like  amount,  to  accompany  said  bond,  the 
principal  of  which  shall  become  due  and  payable,  Five  Hundred  Dollars 
($500)  on  each  interest  day  for  five  successive  times,  and  the  balance  of 
principal,  namely,  Four  Thousand,  Five  Hundred  Dollars  ($4,500),  shall 
become  due  and  payable  on  January  1,  1914,  the  unpaid  principal  to  bear 
interest  at  six  per  cent,  per  annum,  payable  January  1  and  July  1  of  each 
year;  and  which  mortgage  is  to  contain  the  usual  ten  days'  interest  and  in- 
stalment clauses,  and  twenty  days'  tax  and  assessment  clauses,  insurance, 
warranty  and  receiver's  clauses,  and  such  other  clauses  as  are  usually  in* 
sorted  in  second  mortgages  drawn  by  the  attorney  for  the  seller,  which  bond 
and  mortgage  shall  be  drawn  by  the  attorney  for  the  seller,  the  cost  of 
drawing  same,  and  of  recording  the  mortgage  and  any  recording  tax  there- 
on, to  be  paid  by  the  purchaser  (or  his  assigns).1 

The  deed  shall  be  delivered  upon  the  receipt  of  said  payments,  at  the 
office  of  Fred  L.  Gross  at  No.  189  Montague  Street,  Brooklyn,  on  Decem- 
ber 1,  1910,  at  11  A.  M. 

Eents,  interest  on  mortgages,  and  insurance  premiums,  if  any,  are  to  be 
adjusted,  apportioned  and  allowed  up  to  the  day  of  taking  title  (or  day 
fixed  for  taking  title). 

THE  SELLER  AGREES  that  Friday  &  Lehmann  are  the  brokers  who 
brought  about  this  sale  and  agrees  to  pay  them  the  sum  of  Three  Hundred 
Dollars  ($300)  brokers'  commission  therefor. 

THE  SELLER  FURTHER  AGREES  'and  hereby  warrants  that  the  sewer,  gas 
and  water  are  in  the  streets  adjoining  said  premises  and  properly  connected 
with  said  premises,  and  that  there  are  no  assessments,  instalment  or  other- 
wise, against  said  premises. 

THE  SELLER  FURTHER  AGREES  that  at  the  time  herein  fixed  for  closing 
of  title,  it  will  produce  and  deliver  to  the  purchaser  certificates  of  the  Tene- 
ment House  Department  of  The  City  of  New  York  showing  that  the  build- 
ings and  improvements  on  said  premises  have  been  inspected,  passed  and 
approved  by  said  department,  and  also  certifying  to  the  right  to  have  said 
premises  occupied,  and  also  proper  proof  that  said  buildings  have  been 
passed  by  the  Building  Department  of  The  City  of  New  York. 

IT  is  AGREED  that  said  premises  are  to  be  conveyed  free  and  clear  of  all 
violations  of  the  Tenement  House  Department  of  The  City  of  New  York. 

This  sale  covers  all  right,  title  and  interest  of  the  seller,  of,  in  and  to 
any  land  lying  in  the  bed  of  any  street,  road  or  avenue,  opened  or  proposed, 
in  front  of  or  adjoining  said  premises,  to  the  centre  line  thereof,  and  all 
right,  title  and  interest  of  the  seller  in  and  to  any  award  made  or  to  be 
made  in  lieu  thereof,  and  the  seller  will  execute  and  deliver  to  the  purchaser, 
on  closing  of  title,  or  thereafter  on  demand,  all  proper  instruments  for  the 
conveyance  of  such  title  and  the  assignment  and  collection  of  such  award. 

If  there  be  a  water  meter  on  the  premises,  the  seller  shall  furnish  a 
reading  to  a  date  not  more  than  thirty  days  prior  to  the  time  herein  set  for 

1  Where  the  property  Is  to  be  conveyed  subject  to  a  first  mortgage,  and  the  pur- 
chase money  mortgage  will  consequently  be  a  second  mortgage,  the  latter  would  ascend 
to  the  position  of  a  first  mortgage  If  the  existing  first  mortgage  Is  paid  and  satisfied. 
The  result  would  be  that  the  owner  of  the  property  could  not  obtain  a  new  mortgage 
which  would  be  prior  in  lien  to  the  purchase  money  mortgage.  To  avoid  this  situation. 
It  Is  quite  common  to  Insert  a  clause  In  the  contract  somewhat  as  follows :  "  Said 
mortgage  is  to  contain  a  clause  subordinating  the  same  to  any  new  first  mortgage  of 

$ should   the   present   first  mortgage   at   any   time  be   satisfied,    and   such   clause 

shall    further    subordinate    said    mortgage    to    any    new    first    mortgage    In    place   of    the 

present  first  mortgage,    provided   the  excess  of  such   new  first  mortgage  above  $ 

is  paid  to  the  holder  of  this  second  mortgage  on  account  of  the  principal  sum.  and  that 
the  holder  of  such  second  mortgage  shall  execute,  acknowledge  and  deliver  any  Instru- 
ments necessary  or  proper  to  effectuate  such  subordination  as  above  agreed,  provided  he 
shall  not  be  obliged  to  incur  any  expense  In  doing  so  (or.  provided  he  shall  be  reim- 
bursed for  any  expenses  he  may  Incur  In  doing  so,  to  an  amount  not  exceeding  $ )." 


400  SCHEDULES   AND   FORMS. 

closing  title  and  the  unfixed  meter  charge  for  the  intervening  time  shall  be 
apportioned  on  the  basis  of  such  last  reading. 

The  deed  shall  be  in  proper  statutory  short  form  for  record,  shall  con- 
tain the  usual  full  covenants  and  warranty,  and  shall  be  duly  executed  and 
acknowledged  by  the  seller,  at  the  seller's  expense,  so  as  to  convey  to  the 
purchaser  (or  his  assigns)  the  fee  simple  of  the  said  premises,  free  from  all 
incumbrances,  except  as  herein  stated. 

The  seller  shall  give  and  the  purchaser  shall  accept  a  title  such  as  the 
New  York  Title  Guarantee  Company  will  approve  and  insure. 

The  gas  fixtures,  chandeliers,  shades,  awnings,  gas  ranges,  mantels, 
mirrors  over  mantels,  ash  cans  or  receptacles  now  in  or  upon  said  premises, 
and  the  carpets,  oil  cloths  and  mattings  in  the  halls  of  the  buildings  on  said 
premises,  and  all  personal  property  appurtenant  to  or  used  in  the  operation 
of  said  premises  is  represented  to  be  owned  by  the  seller  and  is  included  in 
this  sale. 

All  sums  paid  on  account  of  this  contract,  and  the  reasonable  expense 
of  the  examination  of  the  title  to  said  premises  are  hereby  made  liens  there- 
on, but  such  liens  shall  not  continue  after  default  by  the  purchaser  under 
this  contract. 

The  risk  of  loss  or  damage  to  said  premises  by  fire  until  the  delivery  of 
the  deed  is  assumed  by  the  seller.1 

The  stipulations  aforesaid  are  to  apply  to  and  bind  the  heirs,  executors, 
administrators,  successors  and  assigns  of  the  respective  parties. 

WITNESS  the  signatures  and  seals  of  the  above  parties. 

EXECUTIVE  EEALTY  COMPANY. 

COEPOEATE  )  By  WALTEE  GEAHAM, 

SEAL       j  President. 

In  the  presence  of* 

HOWAED  McFAELANE. 

WILMOT  E.  WETMOEE.          [SEAL] 


Form  18.— Contract  of  Sale.    Cook  County,  Illinois.3 

CONTEACT  OF  SALE. 


THIS  AGEEEMENT  WITNESSETH,  That 

hereinafter  called  the  purchaser,  hereby  agree ...  to  buy,  and 

hereinafter  called  the  seller, 

hereby  agree. .  .to  sell  at  the  price  of dollars, 

and  upon  the  terms  and  conditions  herein  specified,  the  following  described 
real  estate,  situated  in  the  County  of  Cook  and  State  of  Illinois,  to  wit: 


together  with  all  improvements  thereon,  including  all  screens  for  windows  or 
doors,  storm  doors,  storm  windows,  awnings,  shades,  gas  fixtures  and  globes, 

electric  light  fixtures  and  globes,  heating  apparatus,  gas  ranges 

and  all  other  fixtures  that  pertain  to  and  are  a 

part  of  said  premises. 

1  Clauses  for  liquidated  damages  for  breach  of  the  contract  are  sometimes  inserted. 
For  such  clauses  see  Forms  18-21,  25,  28. 

a  Acknowledgment  may  be  added.  An  acknowledgment  makes  the  contract  admis- 
sible In  evidence  without  further  proof.  N.  Y.  Code  of  Civil  Pro.,  §  937. 

s  This  form  Is  supplied  by  and  published  with  the  permission  of  the  Cook  County 
(Illinois)  Real  Estate  Board. 


CONTRACTS   FOB   SALE   OF   REAL,  ESTATE.  401 

Said  premises  are by feet 

being  also  known  as  Number and 

improved  with 

On  compliance  by  the  purchaser  with  his  part  of  this  agreement,  the 
seller  hereby  agrees  to  convey  to  him  a  good  and  merchantable  title  to  said 

premises  by  good  and  sufficient 

warranty  deed,  with  release  of  dower  and  homestead  rights,  and  deliver 
possession  of  said  premises  free  and  clear  of  all  incumbrances  except  the 
following,  to  which  said  conveyance  is  to  be  made  subject,  viz.: 

1.  General  taxes  levied  after  the  year  19 .... 

2.  Special  taxes  or  assessments  levied  for  improvements  not  completed 
at  the  date  of  this  agreement. 

3.  The  following  unpaid  installments  of  special  assessments  which  fall 
due  after  the  date  of  this  agreement,  for  improvements  completed,  viz.: 

4.  The  following  building  lines  and  restrictions  upon  the  use  of  the 
premises,  viz. :    

5.  The  following  party-wall  agreements,  viz. : 

6.  Existing  leases,  expiring  as  follows : 

7.  The  following  mortgages  or  trust  deeds,  viz. : 

on  which  there  remains  unpaid 

dollars. 

The   purchaser   has   deposited dollars   as 

earnest  money  to  be  applied  on  the  purchase.  Within  five  days  after  the 
title  has  been  accepted,  or  all  material  objections  thereto  have  been  cured,  or 
after  the  seller  has  furnished  a  guarantee  policy  as  permitted  by  this  agree- 
ment, the  purchaser,  provided  the  said warranty  deed  is 

then  ready  for  delivery,  agrees  to  pay  to  the  seller,  at  the  office  of 

the  additional  sum  of dollars, 

and  for  the  balance  of  the  purchase  price  to  make  and  deliver  to  the  seller 

his  principal  note  or  notes,  of  even  date  with  the  said 

warranty  deed,  for  the  sum  of dollars, 

payable    

with  interest  at  the  rate  of per  cent,  per  annum,  payable  semi- 

annually,  and  further  evidenced  by  interest  notes;  said  principal  and  in- 
terest notes  to  be  secured  by  purchase-money  trust  deed  on  said  premises  to 
such  trustee  as  the  seller  shall  designate.  The  said  notes  shall  be  payable  to 

the  order  of  and  endorsed  by  the  purchaser and 

both  principal  and  interest  notes  shall  bear  interest  after  maturity  at  the 
rate  of  seven  per  cent,  per  annum  until  paid.  Said  principal  and  interest 
notes  and  trust  deed  shall  be  in  the  form  known  as  Cook  County  Keal  Estate 
Board  forms  numbers  2,  3  and  4  respectively,  including  the  provisions  there- 
in contained  for  payment  in  gold  coin,  and  all  the  other  provisions,  con- 
ditions and  stipulations,  whether  matters  of  form  or  of  substance,  contained 
in  the  printed  forms  of  notes  and  trust  deed  above  specified. 

The  seller  shall,  within days  from  the  date  hereof — 

(a)1  Furnish  to  the  purchaser  for  examination  a  complete,  merchant- 
able Abstract  of  Title,  or  merchantable  copy,  brought  down  to  the  date  of 

this  agreement  by  the Title  and  Trust 

Company,  of  Chicago,  Illinois,  whose  decision  on  the  merchantability  of 
said  abstract  or  copy  shall  be  final,  showing  good  and  merchantable  title  de- 
ducible  of  record  in  fee  simple  in  the  seller,  subject  only  to  the  exceptions 
hereinabove  specified; 

(b)1  Furnish  to  the  purchaser  a  Title  Guarantee  Policy,  issued  by  the 
Title  and  Trust  Company,  of  Chicago,  Illinois,  brought 

1  Of  options  a,  b  and  c,  strike  out  two,  leaving  one  standing. 


402  SCHEDULES   AND   FOEMS. 

down  to  the  date  of  this  agreement,  guaranteeing  the  purchaser  against  loss 
or  damage  to  the  extent  of  the  purchase  price  by  reason  of  defects  in  or 
liens  upon  the 'seller's  title,  in  their  usual  form,  and  subject  only  to  the  ex- 
ceptions hereinabove  specified  and  to  questions  of  survey  and  rights  of 
parties  in  possession  and  mechanics'  liens  not  shown  of  record; 

(c)1  Furnish  to  the  purchaser  a  Certificate  of  Title,  issued  by  the 
Registrar  of  Titles  of  Cook  County,  Illinois,  brought  down  to  the  date  of 
this  agreement,  showing  good  and  merchantable  title  in  the  seller,  subject 
only  to  the  exceptions  hereinabove  specified. 

If  an  abstract  of  title  be  furnished,  the  purchaser  shall,  within 

days  after  the  delivery  of  said  abstract,  deliver  to  the  seller, 

with  the  abstract,  a  written  statement  of  his  objections,  if  any,  to  the  title, 
or  a  written  statement  to  the  effect  that  the  title  is  satisfactory.  In  case 
there  are  material  objections  to  the  title,  the  seller  shall  be  allowed  sixty 
days  to  cure  the  same.  If  all  material  objections  are  cured  within  said  sixty 

days,  the  purchaser  shall,  upon  tender  of  said 

warranty  deed,  pay  or  secure  the  said  purchase  price  as  herein  provided.  If 
the  purchaser  still  rejects  the  title,  the  seller  may,  at  his  option,  within 

days  after  said  rejection,  furnish  the  purchaser  with  a 

guarantee  policy  issued  by  the  said  Title  and  Trust  Company  in  their  usual 
form,  guaranteeing  the  purchaser  against  loss  or  damage  to  the  extent  oi 
the  purchase  price  by  reason  of  defects  in  or  liens  upon  the  seller's  title, 
subject  only  to  the  exceptions  hereinabove  specified  and  to  questions  of  sur- 
vey and  rights  of  parties  in  possession  and  mechanics'  liens  not  shown  of 
record;  and  said  policy  shall  be  accepted  by  the  purchaser  as  curing  all 
material  objections  to  the  title 

Should  the  purchaser  fail  to  perform  his  part  of  this  agreement  in  the 
time  and  manner  specified  herein,  the  said  earnest  money  shall,  at  the 
seller's  option,  be  retained  as  liquidated  damages,  and  thereupon  this  agree- 
ment shall  become  and  be  null  and  void  as  to  the  said  premises. 

The  abstract,  if  any,  goes  with  the  title,  and  shall  belong  to  the  pur- 
chaser on  completion  of  the  sale,  subject,  however,  to  the  right  of  any 
mortgagee  or  trustee  in  possession  thereof. 

In  case  of  any  loss  or  damage  by  fire  before  delivery  of  the 

warranty  deed  herein  provided  for,  the  purchaser  may,  at  his 

option,  either  declare  this  agreement  terminated,  in  which  event  his  earnest 
money  shall  be  refunded;  or  complete  the  agreement  according  to  its  terms, 
in  which  event  he  shall  be  entitled  to  all  insurance  money  payable  to  the 
seller  by  reason  of  such  loss  or  damage.  Such  option  shall  be  exercised  by 
notice  to  the  seller  in  writing  within  five  days  after  the  loss  or  damage  has 
been  adjusted,  and  the  purchaser  notified  in  writing  by  the  seller  of  the 
true  amount  thereof;  otherwise  the  purchaser  shall  be  deemed  to  have 
elected  to  proceed  with  the  agreement  according  to  its  terms. 

If  the  building  should  be  destroyed  or  substantially  injured  before 
delivery  of  said  deed  by  other  accident  or  casualty  than  fire,  the  seller  may 
restore  the  building  at  once  and  require  performance  of  this  agreement; 
otherwise  the  purchaser  shall,  at  his  option,  be  released,  and  his  earnest 
monev  shall  be  refunded. 

The warranty  deed  and  the  purchase-money  notes  and 

trust  deed,  if  any,  herein  provided  for,  shall  bear  the  same  date  as  this 
agreement,  but  the  interest  on  said  incumbrance  and  on  any  other  incum- 
brance  on  said  premises,  together  with  the  rents,  water  taxes 

and  the  general  taxes  for  the  year  19 ,  reckoning  said  taxes  from  the 

1st  day  of  April,  shall  be  adjusted  pro  rata  as  of  the  date  of  delivery  of 

i  Of  options  a,  b  and  c,   strike  out  two,  leaving  one  standing. 


CONTRACTS   FOR   SALE   OF   REAL   ESTATE.  403 

said  deed.  If  the  amount  of  the  taxes  for  that  year  is  not  ascertainable,  it 
shall  be  assumed  to  be  the  same  as  for  the  previous  year.  The  seller  shall 
be  entitled  to  his  pro  rata  allowance  for  premiums  on  unexpired  insurance, 
provided  said  insurance  is  placed  in  companies  acceptable  to  the  purchaser 
and  to  the  mortgagee  or  trustee,  and  provided  all  policies  are  delivered, 
properly  assigned,  at  the  time  of  the  delivery  of  the  said  deed.  Existing 
leases  shall  be  assigned  and  delivered  to  the  purchaser.  All  canceled  notes 
relating  to  outstanding  incumbrances  shall  be  delivered  to  the  purchaser,  or, 
in  lieu  thereof,  a  written  statement  from  the  trustee  or  mortgagee  to  the 
effect  that  said  missing  notes  have  been  paid. 

Time  is  of  the  essence  of  this  agreement,  and  of  all  the  conditions 
thereof. 

All  covenants  and  agreements  herein  shall  extend  to  and  bind  the  heirs, 
executors,  administrators  and  assigns  of  the  respective  parties. 

This  agreement  and  the  earnest  money  aforesaid  shall  be  held  in  escrow 

by    

who  shall  not  record  the  same  unless,  .he.  .deem,  .it  necessary  for  the  pro- 
tection of  the  purchaser  so  to  do,  and  who  shall  dispose  of  the  earnest  money 
according  to  the  terms  hereof;  but  the  holder  of  said  escrow  shall  not  be 
liable  except  for  gross  negligence  or  willful  default. 

IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  set  their  hands 

and  seals  this day  of A.  D.  19 

[SEAL] 

[SEAL] 

[SEAL] 

IN  CONSIDERATION  of  the  execution  of  the  foregoing  agreement  by  the 
purchaser  therein  named,  the  undersigned  assents  to  the  terms  thereof,  and 

agrees  to  sign,  acknowledge  and  deliver  the warranty 

deed  therein  mentioned  for  the  purpose  of  releasing  and  waiving  all  dower 
and  homestead  rights. 

[SEAL] 

[SEAL] 

The  foregoing  agreement  was  negotiated  and  procured  for  the  under- 
signed   by who recognized 

as  the  broker of  the  undersigned  in  the  transaction. 


STATE  OP  ILLINOIS    )       . 

COUNTY  OF  COOK      } 

I, in  and  for  said  County, 

in  the  State  aforesaid,  Do  HEREBY  CERTIFY,  That 

personally  known  to  me  to  be  the  same  person 

whose  name subscribed  to  the  foregoing  Contract  of  Sale, 

appeared  before  me  this  day  in  person,  and  acknowledged  that.  .he. .  signed, 

sealed  and  delivered  the  said  Contract  of  Sale  as 

free  and  voluntary  act,  for  the  uses  and  purposes  therein  set  forth,  includ- 
ing the  release  and  waiver  of  the  right  of  homestead. 

Given  under  my  hand  and seal  this day 

of..  19 


NOTARIAL 
SEAL 


404  SCHEDULES   AND   FOEMS. 

Form  19.— Contract  of  Sale.    Chicago,  Illinois.1 

CONTEACT  OF  SALE. 


THIS  MEMORANDUM  WITNESSETH,  That 

hereinafter    called    the    purchaser hereby 

agree to  purchase  at  the  price  of Dollars, 

the  following  described  real  estate,  situate  in  the  County  of  Cook,  and  State 
of  Illinios,  to  wit : 

(Description  here.) 

and    

hereinafter  called  the  vendor ,  agree to  sell  said  premises  at  said 

price,  and  to  convey  by  full  Warranty  Deed  with  release  of  dower,  inchoate 
or  otherwise,  and  homestead  rights  or  estates  to  said  purchaser ....  a  good 
and  merchantable  title  thereto,  subject  to:  (1)  Existing  leases  expiring 
;  (2)  Special  assessments  for  im- 
provements not  yet  completed;  (3)  The  installments  not  at  the  date  hereof 
due  of  any  special  assessment  for  improvements  heretofore  completed;  (4) 

Water  taxes  payable  after ;    (5)    General 

taxes  levied  or  assessed  after  the  year  A.  D ;    (6)  Building 

lines,  if  any;  (7)  Building  or  liquor  restrictions,  if  any;  (8)  Party  wall 
rights  or  agreements,  if  any. 


Said    purchaser    has    paid Dollars 

as  earnest  money  to  be  applied  on  said  purchase  when  consummated,  and 

agrees  to  pay  within days  after  the  title  has  been 

found  good  and  merchantable  or  has  been  accepted,  or  after  a  guarantee 
policy,  hereinafter  mentioned,  has  been  delivered  to  said  purchaser  subject 

as  aforesaid  and  as  hereinafter  mentioned,  the  further  sum  of 

Dollars,  as  follows,  to-wit : 


to  be  secured  by  note  or  notes  and  mortgage  or  trust  deed  of  even  date  with 
the  Warranty  Deed  above  mentioned,  on  said  premises  in  the  form  or- 
dinarily used  by  the  Chicago  Title  and  Trust  Company. 

The  said  vendor. . .  .agree. . .  .to  furnish  and  deliver  to 

a  complete  merchantable  abstract  of  title  or  merchantable 

copy  thereof,  within  a  reasonable  time,  brought  down  to  include  the  date 
hereof. 

Upon  the  receipt  of  said  abstract  the  said  purchaser shall  have 

days  thereafter  in  which  to  examine  the  title  to  said  premises,  and  if  upon 
such  examination,  objections  to  the  title  to  said  premises  are  found,  then 
said  abstract  and  a  written  statement  of  such  objections  shall  be  delivered 
to  said  vendor. . .  .and. . .  .he. . .  .shall  have  sixty  days  after  receiving  said 
abstract  and  written  statement  of  objections  within  which  to  cure  such  ob- 
jections, and  should  said  objections  be  not  cured  within  said  sixty  days, 
then,  unless  the  said  vendor ....  shall  (in  case  he  deems  such  objections 
immaterial)  within  said  sixty  days  furnish  said  purchaser  with  a  guarantee 
policy  in  usual  form,  to  be  issued  by  the  Chicago  Title  and  Trust  Company, 
guaranteeing  said  purchaser. ..  .against  any  loss  or  damage  to  the  extent 
of  the  purchase  price,  by  reason  of  defects  in  or  liens  upon  the  title  of  said 

i  Form  of  the  Chicago  Title  &  Trust  Co. 


CONTRACTS   FOB   SALE   OF   REAL   ESTATE.  405 

vendor. . .  .to  said  premises  at  the  date  hereof,  subject  only  as  hereinbefore 
stated  and  as  follows,  to- wit:  (1)  Bights  or  claims  of  parties  in  possession 
not  shown  of  record  and  questions  of  surrey;  (2)  Mechanics'  liens,  if  any, 
where  no  notice  thereof  appears  of  record;  (3)  Special  taxes  or  special 
assessments,  if  any,  which  have  not  been  confirmed  by  a  court  of  record; 


said  earnest  money  shall  be  refunded  and  this  contract  shall  become  in- 
operative and  be  canceled,  and  surrendered  to  the  vendor 

Should  said  purchaser ....  fail  to  perform  this  contract  on 

part  at  the  time  and  in  the  manner  herein  specified,  the 

earnest  money  shall  at  the  option  of  the  vendor be  forfeited  as  liqui- 
dated damages  including  commissions  to  be  paid  by  vendor 

In  case  of  loss  or  damage  by  fire  in  or  about  any  building  or  buildings 
which  may  be  situated  upon  said  premises,  the  purchaser. . .  .shall  have  the 
option  of  accepting  all  money  derived  from  the  insurance  for  such  loss  or 
damage  and  to  complete  this  contract  in  the  manner  herein  specified  or  of 
declaring  this  contract  terminated,  such  option  to  be  exercised  within  5 

days  after  such  loss  or  damage  shall  be  adjusted  and  the  purchaser 

notified  in  writing  of  the  true  amount  thereof. 

Existing  leases  and  fire  insurance,  if  any,  are  to  be  duly  assigned  to  the 
purchaser ....  and  the  rents  and  premiums  are  to  be  adjusted  pro  rata  as 
of  the  date  of  the  delivery  of  said  Warranty  Deed. 

It  is  understood  that  no  tender  of  the  deed  or  of  said  policy  shall  be 

required  but  that  a  notice  addressed  to  said  purchaser. . .  .at 

and  deposited,  postage  prepaid,  in  the  post  office  in  Chi- 
cago to  the  effect  that  said  deed  is,  or  in  case  of  guarantee  policy,  as  afore- 
said, said  deed  and  policy  are,  ready  for  delivery  shall  have  all  the  force  and 
effect  of  a  tender  of  the  same. 

Time  is  of  the  essence  of  this  contract  and  of  all  the  conditions  thereof. 

This  contract  and  the  earnest  money  aforesaid  shall  be  held  in  escrow 

by for  the  mutual  benefit  of 

the  parties  hereto.1 

Dated  the day  of ,  A.  D.,  19 

[SEAL] 

[SEAL] 

[SEAL] 

THIS  MEMORANDUM  WITNESSETH,  That  the  following  Agreement  shall 
be  taken  to  be  a  part  of  the  foregoing  agreement  and  supplementary  thereto, 
to-wit : 

After  the  title  to  the  real  estate  hereinbefore  described  has  been  ex- 
amined and  approved  by  the  purchaser  or  his  attorney,  or  the  Chicago  Title 
and  Trust  Company  has  indicated  in  writing  its  willingness  to  issue  its 
guarantee  policy  as  provided  in  said  contract,  then  said  purchaser  shall  de- 
posit with  the  Chicago  Title  and  Trust  Company  in  escrow  the  balance  of 
the  purchase  price  aforesaid,  together  with  the  purchase  money  notes  and 
mortgage  or  trust  deed,  if  any,  and  the  said  vendor.  .  .  .shall  deliver  to  said 
company,  all  abstracts  of  title,  leases,  insurance  policies,  tax  receipts  and 
title  papers  in  his  possession  relating  to  said  premises  and  the  Warranty 
I>(>('<1  aforesaid,  which  Warranty  Deed,  together  with  said  mortgage  or  trust 
deed,  if  any,  shall  be  by  said  company  forthwith  placed  on  record,  and  the 
abstract  aforesaid  or  the  searches  for  guarantee  policy  aforesaid  shall  be 
brought  down  to  cover  the  date  of  record  of  said  deed  and  trust  deed  or 
mortgage,  if  any,  and  if  it  shall  then  appear  that  the  title  passing  to  said 
purchaser.  . .  .by  said  Warranty  Deed  answers  the  requirements  of  this  con- 

1  See  Form  32  infra,  "  Deed  and  Money." 


406  SCHEDULES   AND    FORMS. 

tract,  then  the  Chicago  Title  and  Trust  Company  shall  pay  the  purchase 
price  and  deliver  the  notes  deposited  with  it  hereunder  to  said  vendor. . . . 
or  to  agent  designated  in  writing, 'and  deliver  to  the  purchaser.  . .  .or  agent 
designated  in  writing,  the  abstracts,  guarantee  policy,  leases,  tax  receipts 
and  title  papers  deposited  with  it  under  the  terms  hereof. 

In  case  the  title  shall  have  been  examined  and  approved  by  the  pur- 
chaser. . .  .or attorney  as  herein  set  forth,  then  the  title  to  said 

premises  shall  be  assumed  to  be  as  stated  in  the  written  opinion  thereon 
and  the  title  subsequent  to  the  date  of  such  opinion  shall  be  examined  and 

approved  by upon  whose 

opinion  the  said  Chicago  Title  and  Trust  Company  shall  act  in  performing 
its  duties  as  escrowee  hereunder. 

Eeal  Estate  broker's  commission  of to  be  paid  by 

to 

Escrow  fee  to  be  paid  by 

Abstract  fee  to  be  paid  by 

Guarantee  policy  premium  to  be  paid  by 

Kecording  fees  to  be  paid  as  follows : 


IN  WITNESS  WHEREOF,  the  said  parties  hereto  have  hereunto  set  their 

hands  and  seals  this day  of 

,  A.  D.  19.. 


[SEAL] 
[SEAL] 
[SEAL] 


The  following  form  of  contract  for  sale  of  real  estate 
provides  for  a  title  guarantee  policy  instead  of  an  ab- 
stract of  title. 

Form  20.— Contract  of  Sale.    Chicago,  Illinois.1 

CONTEACT  OF  SALE. 


THIS  MEMORANDUM  WITNESSETH,  That 

hereinafter    called    the    purchaser. . .  .hereby 

agree ....  to  purchase  at  the  price  of Dollars, 

the  following  described  real  estate,  situate  in  the  County  of  Cook,  and  State 
of  Illinois,  to-wit : 

(Description  here.) 
and    

hereinafter  called  the  vendor....,  agree....  to  sell  said  premises  at  said 
price,  and  to  convey  by  full  Warranty  Deed  with  release  of  dower  inchoate 
or  otherwise,  and  homestead  rights  or  estates  to  said  purchaser.  ...  a  good 
and  merchantable  title  thereto,  subject  to:  (1)  Existing  leases  expiring 

;     (2)    Special    assessments    for 

improvements  not  yet  completed;  (3)  The  instalments  not  at  the  date  hereof 

1  Form  of  the  Chicago  Title  &  Trust  Co. 


CONTRACTS   FOR   SALE    OF    REAL   ESTATE.  407 

due  of  any  special  assessment  for  improvements  heretofore  completed;   (4) 

Water  taxes  payable  after ;    (5)  General  taxes  levied 

or  assessed  alter  the  year  A.  D ;    (6)  Building  lines,  if  any;    (7) 

Building  or  liquor  restrictions,  if  any;   (8)  Party  wall  rights  or  agreements, 
if  any    


Said  purchaser. . . .    has  paid Dollars 

as  earnest  money  to  be  applied  on  said  purchase  when  consummated,  and 

agree ....  to  pay  within days  after  the  guarantee 

policy  in  substance  and  form  hereinafter  mentioned,  has  been  delivered  to 

said  purchaser.  .  .  . ,  the  further  sum  of 

Dollars,  as  follows,  to- wit : 


to  be  secured  by  note  or  notes  and  Mortgage  or  Trust  Deed  of  even  date 
with  the  Warranty  Deed  above  mentioned,  on  said  premises  in  the  form 
ordinarily  used  by  the  Chicago  Title  and  Trust  Company. 

The  said  vendor. . .  .agree. ...  to  furnish  and  deliver  to  said  vendee. . . 

within days  from  the  date  hereof,  a  guarantee  policy  in  usual 

form,  to  be  issued  by  the  Chicago  Title  and  Trust  Company,  guaranteeing 
said  purchaser. . . .  against  any  loss  or  damage  to  the  extent  of  the  purchase 
price,  by  reason  of  defects  in  or  liens  upon  the  title  of  said  vendor. ...  to 
said  premises  at  the  date  hereof,  subject  only  to  the  matters  hereinbefore 
stated  and  to  the  following  matters,  to-wit:  (1)  Bights  or  claims  of 
parties  in  possession,  not  shown  of  record,  and  questions  of  survey;  (2) 
Mechanics'  liens,  if  any,  where  no  notice  thereof  appears  of  record;  (3) 
Special  taxes  or  special  assessments,  if  any,  which  have  not  been  confirmed 
by  a  court  of  record ; 

and  in  case  said  Chicago  Title  and  Trust  Company  shall  be  unable  or  un- 
willing to  issue  said  guarantee  policy  within  the  time  aforesaid,  said  earnest 
money  shall  be  refunded  and  this  contract  shall  become  inoperative  and  be 
canceled,  and  surrendered  to  the  vendor 

Should  said  purchaser. . . .  fail  to  perform  this  contract  on 

part  at  the  time  and  in  the  manner  herein  specified,  the  earnest  money  shall, 
at  the  option  of  the  vendor . . . . ,  be  forfeited  as  liquidated  damages  includ- 
ing commissions  to  be  paid  by  vendor 

In  case  of  loss  or  damage  by  fire  in  or  about  any  building  or  buildings 
which  may  be  situated  upon  said  premises,  the  purchaser. . . .  shall  have  the 
option  of  accepting  all  money  derived  or  to  be  derived  from  the  insurance 
for  such  loss  or  damage  and  to  complete  this  contract  in  the  manner  herein 
specified,  or  of  declaring  this  contract  terminated,  provided  such  option  shall 
be  exercised  at  any  time  after  such  loss  by  fire  shall  occur,  and  not  later 
than  five  days  after  such  loss  or  damage  shall  be  adjusted  and  the  pur- 
chaser. . .  .notified  in  writing  of  the  true  amount  thereof. 

Upon  the  consummation  of  this  sale,  existing  leases  and  fire  insurance, 

if  any,  are  to  be  duly  assigned  to  the  purchaser ,  and  the  rents  and 

premiums  are  to  be  adjusted  pro  rata  as  of  the  date  of  the  delivery  of  said 
Warranty  Deed. 

It  is  understood  that  no  tender  of  the  deed  or  of  said  policy  shall  be 

required,  but  that  a  notice  addressed  to  said  purchaser. ...  at 

and  deposited,  postage  prepaid,  in  the  post  office  in 

Chicago,  Illinois,  to  the  effect  that  said  deed  and  guarantee  policy  are 
ready  for  delivery,  shall  have  all  the  force  and  effect  of  a  tender  of  the 
same. 

Time  is  of  the  essence  of  this  contract  and  of  all  the  conditions  thereof. 

This  contract  and  the  earnest  money  aforesaid  shall  be  held  in  escrow 


408  SCHEDULES   AND    FORMS. 

by  the  Chicago  Title  and  Trust  Company  for  the  mutual  benefit  of  the 
parties  hereto.1 

Dated  the day  of ,  A.  D.,  19 

[SEAL] 

[SEAL] 

[SEAL] 

THIS  MEMORANDUM  WITNESSETH,  That  the  following  Agreement  shall 
be  taken  to  be  a  part  of  the  foregoing  agreement  and  supplementary  there- 
to, to-wit: 

After  the  title  to  the  real  estate  hereinbefore  described  has  been  ex- 
amined and  approved  by  the  Chicago  Title  and  Trust  Company,  and  it  has 
indicated  in  writing  its  willingness  to  issue  its  guarantee  policy  as  provided 
in  said  contract,  then  said  purchaser. . . .  shall  deposit  with  the  Chicago 
Title  and  Trust  Company  in  escrow  the  balance  of  the  purchase  price  afore- 
said, together  with  the  purchase  money,  notes  and  mortgage  or  trust  deed, 
if  any,  and  the  said  vendor. . . .  shall  deliver  to  said  Company  all  abstracts 
of  title,  leases,  insurance  policies,  tax  receipts  and  title  papers  in  his  pos- 
session relating  to  said  premises  and  the  warranty  deed  aforesaid,  which 
warranty  deed,  together  with  said  mortgage  or  trust  deed,  if  any,  shall  be 
by  said  Company  forthwith  placed  on  record,  and  the  searches  for  guarantee 
policy  aforesaid  shall  be  brought  down  to  cover  the  date  of  record  of  said 
deed  and  trust  deed  or  mortgage,  if  any,  and  if  it  shall  then  appear  that  the 
title  passing  to  said  purchaser. ...  by  said  warranty  deed  answers  the  re- 
quirements of  the  foregoing  contract,  then  the  Chicago  Title  and  Trust 
Company  shall  pay  the  purchase  price  and  deliver  the  notes  deposited  with 
it  hereunder  to  said  vendor ....  or  to  agent  designated  in  writing,  and  de- 
liver to  the  purchaser. ..  .or  agent  designated  in  writing,  the  abstracts, 
guarantee  policy,  leases,  tax  receipts  and  title  papers  deposited  with  it 
under  the  terms  hereof. 

Real  Estate  broker's  commission  of to  be  paid  by 

to    

Escrow  fee  to  be  paid  by 


Guarantee  policy  premium  to  be  paid  by. 
Eecording  fees  to  be  paid  as  follows:.... 


IN  WITNESS  WHEREOF,  the  said  parties  hereto  have  hereunto  set  their 

hands  and  seals  this day  of 

,  A.  D.  19 

[SEAL] 

[SEAL] 

[SEAL] 

Form  21.— Contract  of  Sale.     Philadelphia,   Pennsyl- 
vania.2 

CONTEACT  OF  SALE. 


THIS  AGREEMENT  made  the day  of 

A.  D.  19 between of  the  first  part  and 

of  the  second  part ; 

WITNESSETH:  That  the  said  part. . .  .of  the  first  part  agree. . .  .to  sell 
and  convey  to  the  said  part. . .  .of  the  second  part,  and  the  said  part. . .  .of 

1  See  Form  32  infra,   "  Deed  and  Money." 

*  Supplied  by  Frederick  M.   Pile,   Esq.,   of  the  Philadelphia  Bar. 


CONTRACTS   FOR   SALE   OP   REAL   ESTATE.                   409 
the  second  part  agree. ...  to  purchase 

on  the  terms  and  conditions  following  to-wit 


The  part. . .  .of  the  second  part  further  agree to  pay  for  all  muni- 
cipal improvements  in  the  course  of  construction,  at  the  date  hereof,  and  for 
any  such  work  commenced  or  completed  between  the  date  of  this  agreement 
and  the  time  of  settlement. 

The  Gas  Fixtures,  Heaters,  Ranges,  etc.,  annexed  to  the  said  building 
are  included  in  said  sale. 

All  Perpetual  Policies  of  Fire  Insurance  to  be  paid  for  at  withdrawal 
value  and  term  Policies  at  proportionate  value  for  unexpired  term. 

The  premises  are  to  be  conveyed  clear  of  incumbrance,  easements  and 
restriction. 

Possession  to  be  given. 

TAXES,  WATER  RENT,  INTEREST  ON  INCUMBRANCE  (if  any)  RENTS,  etc., 

to  be  apportioned  as  of  the  date  of  settlement,  which  is  to  be  within 

days  from  date  hereof,  time  being  of  the  essence  of  this  Con- 
tract. 

The  Title  is  to  be  good  and  marketable  and  such  as  will  be  insured  by 
any  responsible  Title  Company,  at  the  regular  rates. 

If  the  part ....  of  the  second  part  shall  fail  to  complete  this  agreement 
within  the  time  specified  the  same  shall,  at  the  option  of  the  part ....  of  the 
first  part,  become  null  and  void  and  the  sum  paid  on  account  shall  be  re- 
tained by  the  part ....  of  the  first  part  as  compensation  for  the  damage  and 
expense  to  which  he  has  been  put  on  this  behalf. 

If  for  any  reason  a  good  and  marketable  title,  such  as  will  be  insured 
as  aforesaid,  cannot  be  made,  this  agreement  shall  be  void  and  the  sum  paid 
on  account  as  above  provided  shall  be  returned  by  the  part ....  of  the  first 
part  to  the  part. . .  .of  the  second  part  in  lieu  of  all  claims  for  damage  or 
otherwise. 

In  view  of  the  injury  which  might  result  to  the  vendor  from  the  record- 
ing of  this  paper,  it  is  expressly  agreed  that  it  is  not  to  be  construed  as  an 
instrument  entitled  to  record  under  the  recording  acts,  and  that  it  shall  not 
under  any  circumstances  be  recorded. 

Without  precluding  the  right,  if  any,  which  either  party  may  have  to 
obtain  by  personal  suit  against  the  other,  either  specific  performance  or 
damages,  it  is  expressly  agreed,  that,  until  consummated  by  delivery  of  a 
Deed,  this  Agreement  shall  convey  no  title  to,  or  interest  in  the  property, 
and  neither  this  agreement,  nor  notice  of  it,  nor  suit  upon  it  shall  affect  the 
rights  of  third  persons  and  such  persons  may,  until  actual  delivery  and  re- 
cording of  a  deed  for  the  property  to  the  vendee  in  accordance  with  the 
Agreement,  deal  with  and  acquire  rights  in  said  property  as  if  no  such 
Agreement  had  been  made. 

AND  IT  is  EXPRESSLY  AGREED  that  the  said 

are  acting  as  Agents  only  and  shall  not  be  held  personally  liable  or  re- 
sponsible by  the  Seller  or  the  Purchaser  for  the  fulfillment  or  non-fulfill- 
ment of  any  part  or  portion  of  this  Agreement  of  Sale. 

THE  said  Parties  hereby  bind  themselves,  their  heirs,  executors  and 
administrators  for  the  faithful  performance  of  the  above  Agreement. 

IN  WITNESS  WHEREOF,  the  said  Parties  have  hereunto  set  their  hands 
and  seals  the  day  and  year  first  above  mentioned. 

[SEAL] 

Sealed  and  Delivered  [SEAL] 

in  the  presence  of 


410  SCHEDULES   AND   FORMS. 

Form  22.— Contract  of  Sale.    Boston,  Massachusetts.1 

CONTEACT  OF  SALE. 


AGREEMENT  made   this day  of 

19 between SELLER 

and   BUYER  . . . . ; 

binding  each  party  mutually  to  the  other  and  his  and  their  respective  heirs, 
executors  and  administrators. 

THE  SELLER.  . .  .agree. . .  .to  sell,  and  the  BUYER to  buy,  an  Estate 

in  Boston,  being  No on Street,  bounded 


THE  SELLER  ....  to  convey,  by  a  Quit  Claim  Deed,  good  title  in  fee 
simple  to  the  premises,  free  of  all  liens  for  debts  of  deceased  persons  and 
incumbrances  .  


to  keep  the  buildings  insured  as  at  present;  to  pay  or  assign  said  insurance, 
in  case  of  loss,  to  the  Buyer. . . .,  unless  the  premises  are  restored  to  their 
present  condition  previous  to  the  delivery  of  the  Deed ....  and  to  pay  a  com- 
mission of per  cent,  to 

THE   BUYER.  . .  .to   pay Dollars, 

as  follows : Dollars  now ; 

Dollars    on    the 

delivery  of  the  Deed ; 

and  the  balance  by three-year  note  of  even  date  with  said 

deed  bearing  interest,  payable  half-yearly,  at per  cent. 

per  annum,  secured  by  Mortgage  on  said  premises  (Conveyancers  Title  In- 
surance Company 's  form)  ;  failing  so  to  do,  the  money  paid  shall  be  for- 
feited as  Liquidated  Damages  for  breach  of  Contract ;  Rents,  Interest,  Taxes 
and  Water  Rates  to  be  apportioned. 

The  money  to  be  paid  and  the  papers  passed  at  the  CONVEYANCERS 

TITLE  INSURANCE  COMPANY'S  office  at  Twelve  o'clock  noon 

next. 

WITNESS  said  Parties'  hands  and  a  common  seal. 


EXTENSION. 

This  AGREEMENT  is  extended  until 

WITNESS  our  hands  and  common  seal  this day 

of..  ..19.. 


1  This  Is  the  copyright  form  used  by  and  supplied  to  the  author  by  the  Convey- 
ancers Title  Insurance  Company,  Boston,  Mass.,  and  is  published  with  the  permission  of 
that  company. 


CONTRACTS   FOR   SALE   OF   REAL   ESTATE.  411 

Form  23.— Agreement  for  Sale  of  Property.    Baltimore, 
Maryland.1 


CONTRACT  OF  SALE. 


THIS  AGREEMENT  is  made  in  duplicate  this day 

of 19 . . . . ,  between 

SELLER  ....  and PURCHASER  .... 

The  said  seller hereby  sell. . .  .and  agree. . .  .to  convey,  and  the  said 

purchaser. ..  .hereby  buy....  and  agree....  to  pay  for,  the  following  prop- 
erty :  

(Here  insert  description  of  property  and  size  of  lot.) 

Being  the  property  described  in  a dated 

and  recorded  among  the  Land  Records  of  Baltimore  in  Liber 

No fol 

The  said  property  is  in  fee. 

The  said  property  is  leasehold,  subject  to  a  ground  rent  of  $ 

per  year,  which  is  j   J^^?6  j  after years  from  the  date  of 

lease,  at per  cent. 

The  said  property  is  a  ground  rent  which  is  j  ^^SJle6  [    after 

years  from  date  of  lease  at per  cent. 

(Strike  out  all  except  the  kind  of  property  intended.) 

The   purchase   price    is Dollars 

($ ),  payable  in  cash  on  or  about  the day  of 

19 ;  of  the  above  sum  there  has  been  paid  on 

account   the    sum   of Dollars 

($ ),  which  last  mentioned  sum  is  to  be  repaid  to  the  purchaser  in  the 

event  that  the  title  is  not  satisfactory;  time  is  of  the  essence  of  this  agree- 
ment. 

Possession  is  to  be  given  on 

The  property  is  subject  to  the  following  incumbrance : 


Rentals,  taxes,  water  rent,  ground  rent,  and  other  charges  are  to  be 
adjusted  to  the  day  of  transfer. 

The  title  is  to  be  clear  of  all  incumbrances  and  assessments,  and  satis- 
factory to  the  Title  Guarantee  and  Trust  Company. 

WITNESS  the  hands  and  seals  of  the  parties  hereto. 

[SEAL] 
SEAL] 
SEAL] 
WITNESS  : 


NOTE. — As  soon  as  the  contract  is  signed,  the  purchaser  should  insure 
the  improvements.  The  signing  of  a  contract  of  sale  renders  void  the  seller 's 
fire  insurance  policy;  and  if  the  improvements  should  be  destroyed  before 
the  property  is  insured  by  the  purchaser,  the  loss  would  fall  on  the  pur- 
chaser. 

NOTE. — If  the  property  is  in  fee,  the  wife  (if  any)  of  the  seller  should 
sign. 

1  Form  of  Title  Guarantee  &  Trust  Co.  of  Baltimore,  Md. 


412  SCHEDULES   AND   FOKMS. 

Form  24.— Contract  of  Sale.  New  Jersey.   (Short  Form.) 

CONTRACT  OF  SALE. 


AGREEMENT,  made  the day  of 

A.  D.,  19 ,  between 

the  first  party,  and 

the  second  party,  in  manner  following: 

The  first  party  in  consideration  of Dollars, 

to duly  paid,  hereby  agree. . .  .to  sell  unto  the  second  party, 

(Description  here.) 

for  the  sum  of Dollars, 

which  the  said  second  party  hereby  agree to  pay  the  said  first  party,  as 

follows : 

On  Execution  of  this  Agreement $ 

On  Delivery  of  Deed,  Cash $ 

Bond  and  Mortgage  for years,  @. .%        $ 


Total,  $ 

And  the  said  first  party  on  receiving  payments  as  above  set  forth,  shall 

deliver  to  the  said  second  party  or  to assigns  a  duly  executed,  full 

covenant  and  warranty  deed,  conveying  to the  fee  simple  of  said  prem- 
ises, free  from  all  ineumbrance;  said  deed  to  be  delivered  at  the  office  of 
The  New  Jersey  Title  Guarantee  and  Trust  Company,  Nos.  83  and  85 

Montgomery  Street,  Jersey  City,  N.  J.,  on  or  before 

A.  D.,   19 ,  at M. 

IN  WITNESS  WHEREOF,  the  parties  to  these  presents  have  hereto  set 
their  hands  and  seals  the  day  and  year  first  above  written. 

[SEAL] 

Sealed  and  Delivered  in  [SEAL] 

the  Presence  of 


Jeree7'        [  **.:    BE  IT  REMEMBERED,  That  on  this 

day  of A.  D.,  19 ,  before  me 

personally   appeared 

who,  I  am  satisfied ....  the  Grantor in  the  within  Deed  of  Agreement 

named;  and  I  having  first  made  known  to the  contents  thereof, 

did acknowledge  that signed,  sealed  and  delivered  the  same 

as voluntary  act  and  deed,  for  the  uses  and  purposes  therein 

expressed ; 

j  NOTARIAL  ) 
(        SEAL         J 


Form  25.— Contract  of  Sale.    New  Jersey. 

CONTRACT  OF  SALE. 


MEMORANDUM  OF  AGREEMENT,  made  the day 

of ,,.,..,.,  .in  the  year  of  our  Lord,  One  Thousand,  Nine 


CONTRACTS   FOR   SALE   OF   REAL   ESTATE.  413 

Hundred   and between 

of  the of  in  the  County 

of and  State  of   hereafter 

designated  the  party  of  the  First  Part;  and 

of  the of in  the  County 

of  and  State  of hereafter 

designated  the  party  of  the  Second  Part; 

WITNESSETH:  That  the  said  party  of  the  first  part,  for  and  in  consider- 
ation of  the  sum   of 

to  be  paid  and  satisfied  as  hereinafter  mentioned,  and  also  in  consideration 
of  the  covenants  and  agreements  herein  contained,  made  and  entered  into  by 
the  said  party  of  the  second  part,  doth  agree  to  and  with  the  said  party  of 

the  second  part,  that the  said  party  of  the  first  part,  will  convey 

to  the  said  party  of  the  second  part, heirs  and  assigns,  by 

Deed  of free  from  all  encumbrance. . . . 

on  or  before  the day  of 

Nineteen  Hundred  and ;  all lot 

tract or  parcel  of  land  and  premises, 

hereinafter  particularly  described,  situate,  lying  and  being  in  the 

of    in 

the  County  of and  State  of 

(Description  here.) 

And  the  party  of  the  second  part  for 

heirs,  executors  and  administrators,  doth  covenant,  promise  and  agree,  to 

and  with  the  party  of  the  first  part, heirs, 

executors,  administrators  and  assigns,  that the 

party  of  the  second  part,  will  pay  and  satisfy  or  cause  to  be  paid  and 

satisfied,  unto  the  party  of  the  first  part  the  said  sum  of 

as  and  for  the  purchase  money  of  the  foregoing  described  land  and  premises 
in  the  following  manner,  that  is  to  say : 


AND  IT  Is  FURTHER  AGREED  by  the  parties  hereto,  that  the  said  Deed 

shall  be  delivered  and  received  at  the  office  of 

,  Newark,  N.  J.,  between  the  hours  of 

o'clock M.  and o'clock M.  on  the 

day  of 19 

In  case  of  loss  or  damage  to  the  property  by  fire  before  the  title  is 
passed,  the  party  of  the  first  part  shall  allow  to  the  party  of  the  second 
part  the  amount  of  such  loss  or  damage,  to  be  ascertained  by  arbitration  if 
the  parties  cannot  agree. 

And  for  the  performance  of  all  and  singular  the  covenants  and  agree- 
ments aforesaid,  the  said  parties  do  bind  themselves  and  their  respective 
heirs,  erecutors  and  administrators;  and  they  hereby  agree  to  pay,  upon 

failure  to  perform  the  same,  the  sum  of 

which  they  hereby  fix  and  settle  as  liquidated  damages  therefor. 

IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  set  their  hands 
and  seals  in  duplicate  the  day  and  year  first  above  mentioned. 

[SEAL] 

[SEAL] 

Signed,  Sealed  and  Delivered 
in  the  Presence  of 


414  SCHEDULES   AND   FORMS. 

Form  26.— Agent's  Sale  Contract.    Chicago,  Illinois.1 

AGENT'S  SALE  CONTEACT. 


Chicago,  Illinois, 19 .... 

To 

OWNEB. 

I  HEREBY  PROMISE  AND  AGREE  to  purchase  upon  the  following  terms 

and  at  the  price  of Dollars, 

the  real  estate  known  as  Number 

Chicago,  improved  with 

The  legal  description  is 

(Description  here.) 

I  have  paid  the  sum  of Dollars 

as  earnest  money,  which  is  to  be  held  in  escrow,  together  with  this  agree- 
ment, by 

You  are  to  furnish  a  merchantable  abstract  of  title  or  a  title  guarantee 
policy  for  the  amount  of  said  purchase  price,  covering  said  property  and 
brought  down  to  this  date.  If  the  title  is  good,  I  am  to  accept  it  promptly, 
and  within  five  days  after  such  acceptance  you  are  to  be  ready  to  deliver  a 
sufficient  warranty  deed  conveying  to  me  a  good  title  to  said  premises,  sub- 
ject to  the  following  incumbrance,  which  is  to  be  deemed  a  part  of  said 
purchase  price,  and  the  interest  on  which  is  to  be  pro-rated  as  of  the  date 

of  delivery  of  said  warranty  deed,  viz. : 

dollars  due 19 with  interest  at 

per  cent,  per  annum ; Dollars 

due 19 ....  with  interest  at 

per  cent,  per  annum. 

Upon  delivery  of  such  warranty  deed  said  earnest  money  shall  be  paid 

to  you,  and  I  agree  to  pay  you  at  the  same  time  the  further  sum  of 

dollars.  The  balance  of 

dollars  is  to  be  payable 

with  interest  at  the  rate  of per  cent,  per  annum,  due,  at  your  option, 

annually  or  semi-annually,  said  deferred  payment  of  principal  and  the  in- 
stallments of  interest  thereon  to  be  evidenced  by  notes  secured  by  trust  deed 
on  said  property,  which  notes  and  trust  deed  are  to  be  delivered  to  you  at  the 
time  of  the  delivery  of  said  warranty  deed. 

[SEAL] 

[SEAL] 

PURCHASER. 

ACCEPTED 19 

[SEAL] 

OWNER. 


1  This  form   is  supplied   by  and   published   with   the  permission   of  the  Cook   County 
(Illinois)    Real   Estate   Board. 


CONTRACTS   FOR   SALE   OF   REAL   ESTATE.  415 

Form  27.— Contract  for  Sale  of  Restricted  Lots  on  In- 
stallment Plan. 

CONTRACT  OP  SALE. 


New  York, 19 

THIS  AGREEMENT,  made  and  entered  into  the  day  and  year  first  above 
written,  between  the  EXECUTIVE  REALTY  COMPANY,  a  corporation  incorpor- 
ated under  the  laws  of  the  State  of  New  York,  party  of  the  first  part,  and 

party  of  the  second  part ; 

WITNESSETH  :  The  party  of  the  first  part  in  consideration  of  the  sum  of 

Dollars,  to  be  fully 

paid  as  hereinafter  mentioned,  and  of  the  covenants  and  agreements  here- 
inafter set  forth,  agrees  to  sell  unto  the  said  party  of  the  second  part,  and 
the  party  of  the  second  part  agrees  to  buy  ALL  those  certain  lots,  pieces  or 
parcels  of  land,  each  twenty  feet  in  width  by  one  hundred  feet  deep,  situate, 
lying  and  being  in  Nassau  County  and  State  of  New  York,  and  which  on  a 
certain  map,  filed  in  the  office  of  the  Clerk  of  Nassau  County,  entitled  ' '  Map 
of  Idlewild  Park,  situate  at  Idlewild,  Nassau  County,  Long  Island,  N.  Y.," 
surveyed  by  William  Williams,  Civil  Engineer,  are  known  and  distinguished 
as  lots  number 

block  number 

And  the  said  party  of  the  second  part  in  consideration  of  the  premises 
agrees  to  pay  to  the  party  of  the  first  part  the  said  purchase  price,  as  fol- 
lows :  Dollars 

in  cash  on  the  signing  of  this  agreement,  and  the  balance  thereof  in  monthly 

payments  of Dollars, 

payable  at  the  office  of  the  party  of  the  first  part,  on  the 

day  of  each  and  every  month  thereafter  until  the  said  purchase  price  is 
fully  paid. 

The  party  of  the  first  part  on  receiving  the  purchase  price  as  afore- 
said, shall  at  its  own  proper  cost  and  expenses  execute,  acknowledge  and 
deliver  to  the  said  party  of  the  second  part  a  general  warranty  deed  and  the 
usual  full  covenants  for  the  conveying  and  assuring  to  him,  the  fee  simple  of 
the  said  premises  free  from  all  encumbrances,  except  that  the  said  convey- 
ance shall  be  made  subject  to  the  following  covenants,  which  shall  be  taken 
to  be  real  covenants  running  with  the  land  and  binding  upon  the  party  of 
the  second  part  until  January  1,  1925,  when  they  shall  cease  and  determine. 

I.  The  party  of  the  second  part  shall  or  will  not  carry  on  or  suffer  or 
permit  to  be  carried  on,  on  any  portion  of  said  premises,  any  manufacturing 
or  selling  or  dealing  in  malt  or  spirituous  liquors,  or  drinks  of  any  kind,  and 
will  not  erect  or  permit  upon  any  part  of  said  premises,  any  slaughter-house, 
smith-shop,  forge,  furnace,  steam-engine,  brass  foundry,  nail  or  other  iron 
factory,   or  any  manufactory   of  gunpowder,  glue,  varnish,  vitriol,   ink  or 
turpentine,  or  for  the  tanning,  dressing  or  preparing  of  skins,  hides  or 
leather. 

II.  The  said  party  of  the  second  part  shall  or  will  not  erect  or  permit  on 
any  portion  of  said  premises  any  tent  or  dwelling  except  a  private  detached 
dwelling  house  for  not  more  than  two  families,  nor  less  than  two  stories  and 
an  attic  in  height,  nor  of  less  cost  than  Fifteen  Hundred  ($1,500)  Dollars, 
nor  with  a  roof  of  the  character  or  description  known  as  a  flat  roof,  and  no 
house  shall  be  erected  to  front  on  any  street  except  on  which  the  lots  front. 

III.  No  part  of  any  dwelling  including  piazzas,  bay  windows  or  steps 
shall  be  erected  on  any  portion  of  said  premises  nearer  than  ten  feet  from 
the   street   line   of   the   said    premises,   and    no   stable,    automobile   house, 


416  SCHEDULES   AND   FORMS. 

summer  house  or  greenhouse,  shall  be  erected  within  sixty  feet  of  said 
street.  The  main  side  walls  of  the  dwelling  house  shall  stand  at  least  three 
feet  from  the  side  lines  of  the  plot  hereby  conveyed,  and  no  dwelling  on 
said  plot  shall  be  constructed  nearer  than  six  feet  from  any  other  dwelling. 

IV.  No  close  board  fence  shall  be  erected  or  maintained;  and  no  fence 
or  hedge  exceeding  four  feet  in  height  shall  be  maintained  on  any  part  of 
the  plot. 

It  is  understood  and  agreed  that  the  party  of  the  first  part  will  furnish 

with  each  deed,  a  title  policy  of  the Company,  of 

New  York  City,  free  of  cost  to  the  party  of  the  second  part,  and  that  the 
said  party  of  the  first  part  shall  pay  all  taxes  on  said  premises  for  the  years 
and 

The  said  party  of  the  first  part  further  agrees  to  lay  cement  side- 
walks, plant  trees,  and  cut  and  grade  all  streets  shown  on  the  said  map. 

It  is  further  understood  and  agreed  that  upon  default  in  the  payment 
by  the  party  of  the  second  part  of  two  successive  monthly  payments  of  the 
purchase  price  under  this  contract,  the  party  of  the  first  part  shall  have  the 
option  forthwith  to  declare  this  contract  void,  otherwise  the  party  of  the 
second  part  shall  pay  interest  at  six  per  cent,  on  all  deferred  payments. 

The  deed  to  the  said  premises  shall  be  delivered  at  the  office  of  the 

party  of  the  first  part,  No 

New  York  City,  when  the  said  purchase  price  and  interest  charges,  if  any, 
shall  be  fully  paid. 

And  it  is  understood  that  the  stipulations  aforesaid  are  to  apply  to  and 
bind  the  heirs,  executors,  administrators,  successors  and  assigns  of  the  re- 
spective parties. 

WITNESS  the  signatures  and  seals  of  the  above  parties. 

[SEAL] 

[SEAL] 

Signed,  Sealed  and  Delivered 
in  the  Presence  of 


Form  28.— Contract  for  Sale  of  Lots  on  Installment  Plan.1 

CONTEACT  OF  SALE. 


THIS  AGREEMENT,  made  this day  of 

A.  D.  19 ....  by  and  between 

of party  of  the  first  part,  and 

of party  of 

the  second  part; 

WITNESSETH:  That  the  said  party  of  the  first  part,  in  consideration  of 
the  payment  hereinafter  mentioned  and  of  the  stipulations  hereinafter  set 
forth,  agrees  to  sell  to  said  party  of  the  second  part,  upon  the  terms  and 
conditions  hereinafter  set  forth,  the  following  premises  situated 

(Description  here.) 
And  the  said  party  of  the  second  part  agrees  to  purchase  said  premises 

and  to  pay  therefor  the  sum  of Dollars 

in  Gold  Coin  of  the  United  States  of  present  standard  weight  and  fineness,  or 
its  equivalent,  in  actual  market  value  in  lawful  money  of  the  United  States, 
in  the  manner  following,  viz. : 

1  Showing  additional  provisions. 


CONTRACTS   FOR   SALE   OF   REAL   ESTATE.  417 

The  sum  of Dollars 

upon  the  signing  and  delivery  of  these  presents,  receipt  of  which  is  hereby 

acknowledged,  and  the  further  sum  of 

Dollars  in  each  and  every following  the  day  of  the  date  hereof, 

until  said  principal  sum,  with  interest  at per  cent,  per  annum 

on  all  unpaid  balances  from  date  hereof,  payable  semi-annually  hereafter, 

and  all  taxes  or  other  assessments  made 

subsequent  to  the  date  hereof  are  fully  paid. 

And  it  is  mutually  agreed  by  and  between  the  parties  hereto  as  follows: 

First. — The  party  of  the  first  part  agrees  to  pay  all  taxes  or  other  assess- 
ments becoming  due,  within  one  year  from  date  hereof,  but  should  title  be 
taken  within  one  year  from  date  hereof  then  the  party  of  the  first  part 
only  pays  taxes  and  assessments  due  at  date  of  delivery  of  deed. 

Second. — That  all  sums  of  money  payable  to  said  party  of  first  part 

hereunder  shall,  until  further  notice,  be  paid  at  the  office  of 

in during  their  regular  office  hours,  and  the 

receipt  of  said shall  be  sufficient  discharge  there- 
for. All  payments  elsewhere,  to  whomsoever  made,  shall  be  at  the  sole  risk 
and  hazard  of  said  party  of  the  second  part 

Third. — That  prompt  performance  and  time  are  the  nature  and  essence 
of  this  contract  and  each  of  its  conditions,  and  therefore  if  default  of  pay- 
ment is  made  of  any  one  of  said installments  of  said 

principal  sum  for  a  period  of days  after  it  becomes  due,  or  if 

said  party  of  the  second  part  shall  fail  to  perform  any  other  of  the  Agree- 
ments on part  herein  contained,  the  balance  of  the  principal 

sum  then  remaining  unpaid  shall  immediately  become  due  and  payable,  and 
all  rights  of  the  party  of  the  second  part  under  this  Agreement,  and  all 
right,  title,  interest  and  claim  in  and  to  said  described  premises,  shall,  at 
the  option  of  the  party  of  the  first  part,  become  void  and  of  no  effect;  and 
the  said  party  of  the  first  part  shall  be  released  from  all  obligations  here- 
under,  and  all  moneys  theretofore  paid  thereon  shall  be  held  as  liquidated 
damages  by  the  party  of  the  first  part. 

Fourth. — That  no  modification  of  this  agreement,  nor  waiver  of  any 
term  or  condition  hereof,  shall  be  of  any  force  or  effect,  unless  the  same  is 
in  writing,  signed  by  both  of  the  parties  hereto,  and  all  contracts  and  agree- 
ments heretofore  made  by  the  parties  hereto  or  their  agents  are  merged  into 
and  superseded  by  this  agreement;  and  that  no  waiver  of  the  breach  of  any 
such  term  or  condition  shall  be  evidence  of  or  construed  as  a  waiver  of  any 
other  or  subsequent  breach  of  the  same  or  any  other  term  or  condition. 

Fifth. — Said  party  of  the  second  part  doth  hereby  covenant  and  agree 

to  and  with  said  party  of  the  first  part, successors,  and  assigns  as 

follows : 

That  neither  said  party  of  the  second  part heirs  or  assigns 

will  erect  or  permit  on  any  part  of  the  herein  described  premises  any  build- 
ings except  a  detached  two  story  frame  dwelling  house  with  peaked  roof 

upon  each  plot  of  at  least  forty  feet  front  by feet 

in  depth  that  shall  cost  not  less  than  $ ,  nor  shall 

such  building  or  any  part  thereof,  except  steps,  piazzas  or  bay  windows,  and 
other  usual  projections  be  erected  or  maintained  upon  any  part  of  said 
premises  within feet  of  the  line  of 

excepting  that  no  building  for  business  purposes  shall  be  allowed  on  any 
street  or  streets,  excepting  that  part  on  the  west  side  of  and  fronting  on 
,  but  this  exception  does  not  include  saloons  or  per- 
mission for  sale  of  liquors  of  any  kind,  but  does  allow  such  buildings  to 

be  erected  on  the  line  of  said ,  and  said  building  if 

erected,  must  be  two  story  frame  with  peaked  roof  and  detached;  nor  shall 
any  milkman's  stable  be  built,  or  slaughter  house,  or  any  manufactory  for 


418  SCHEDULES   AND   FORMS. 

making  gunpowder,  glue,  varnish,  vitriol,  ink  or  turpentine,  or  for  the  boil- 
ing of  bones,  or  for  the  dressing,  tanning,  or  preparing  of  skins,  hides,  or 
leather,  or  any  brewery,  or  any  building  for  the  carrying  on  of  any  noxious 
or  dangerous  trade  or  business;  or  sell,  or  suffer,  or  allow  to  be  sold  on  the 
premises  hereby  conveyed,  or  any  part  thereof,  strong  or  spirituous  liquors, 
or  ale,  beer  or  wine,  or  intoxicating  liquor  of  any  kind.  Such  barn  or  stable 
for  horses  as  is  appurtenant  to  a  private  residence,  is  hereby  permitted,  and 
such  barn  or  stable  if  erected,  must  stand  at  least  sixty  feet  from  the  avenue 
or  street  upon  which  said  premises  front,  and  not  less  than  fifteen  feet  from 
the  line  of  any  side  streets  or  avenues;  excepting  that  no  stables  are  per- 
mitted on  any  part  of  the  lots  fronting  on 

and in  block  number as  shown  on  above 

mentioned  map. 

Sixth. — Said  party  of  the  first  part  further  agrees  to  grade  all  streets 
and  plant  suitable  shade  trees  thereon  and  lay  cement  sidewalks  in  front  of 
each  lot. 


Seventh. — That  upon  the  full  payment  of  the  said  principal  sum,  with 
the  interest  as  above  provided,  and  the  performance  of  the  conditions  hereof, 
said  premises  shall  be  conveyed  to  said  party  of  the  second  part,  by  a 
proper  Deed,  containing  a  clause  of  general  warranty,  and  the  full  covenants 

for  conveying  and  assuring  the  party  of  the  second  part  or  to 

heirs  or assigns,  the  fee  simple  of  said  premises  free  from 

all  incumbrances  except  as  hereinbefore  mentioned  in  reference  to  taxes  and 
above  restrictions,  together  with  all  the  right,  title  and  interest  of  the  party 
of  the  first  part  hereto,  of,  in  and  to  the  land  lying  in  the  Streets  or  Avenues 
in  front  of  and  adjoining  said  premises,  to  the  center  lines  thereof,  re- 
spectively, but  reserving,  however,  to  the  party  of  the  first  part  the  exclusive 
right  and  privilege  of  giving  and  granting  all  easements,  privileges  and 
rights  of  way  for  mains  of  all  kinds  in  any  and  all  Streets  or  Avenues,  and 
the  party  of  the  second  part  agrees  to  accept  said  Deed  as  full  performance 
by  said  party  of  the  first  part  of  his  covenants  and  undertakings. 

Eighth. — The  stipulations  aforesaid  are  to  apply  to  and  bind  the  heirs, 
executors,  administrators,  and  assigns  of  the  respective  parties. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  hereunto  set  their  hands 
and  seals  the  day  and  year  first  above  written. 

[SEAL] 

[SEAL] 

Signed,  Sealed  and  Delivered  [SEAL] 

in  Presence  of 


The  form  which  follows  is  an  assignment  of  the  fore- 
going contract.  This  assignment  is  written  or  printed  on 
the  back  of  the  instrument  to  which  it  pertains. 

Form  29.— Assignment  of  Contract.    Informal. 

ASSIGNMENT. 


For  a  good  and  valuable  consideration  to  the  undersigned,  in  hand  paid, 
the  receipt  of  which  is  hereby  acknowledged, ,  the 


CONTRACTS     FOR     SALE     OF     REAL     ESTATE.  419 

undersigned,  part.... of  the  second  part  to  the  foregoing  agreement  do... 

hereby  grant,  assign,  sell,  and  set  over  unto 

all rights,  title,  interest,  claim  or  demand  in  and  to   the 

within  agreement,  including  the  right  to  receive  the  deed  therein  mentioned 

in name ;  and  the  said in  consideration  of 

and  by  accepting  this  assignment,  agree  to  the  terms  and  conditions  of  said 
agreement,  and  to  make  all  payments  therein  agreed  to  be  made  by  the 
undersigned,  and  in  all  things  to  carry  out  and  perform  the  same. 

This  assignment  is  subject  to  the  approval  of 

the  party  of  the  first  part  to  the  within  agreement. 

WITNESS hand  this day  of. . 

19.. 


WITNESS  : 

I  hereby  consent  to  the  foregoing  assignment. 


The  following  form  is  for  use  in  New  York  City. 
Form  30.— Contract  for  Exchange  of  Properties. 

CONTEACT    FOE    EXCHANGE. 


AGREEMENT,  made  this day  of 

19 ....  between herein  designated 

as  the  party  of  the  first  part,  and 

herein  designated  as  the  party  of  the  second  part,  for  the  exchange  of 
property; 

WITNESSETH,  as  follows: 

The  party  of  the  first  part,  in  consideration  of  one  dollar  paid,  the 
receipt  of  which  is  hereby  acknowledged,  and  also  in  consideration  of  the 
conveyance  by  the  party  of  the  second  part  of  the  real  property  hereinafter 
mentioned,  hereby  agrees  to  grant  and  convey  to  the  party  of  the  second 

part,  at  a  valuation  for  the  purpose  of  this  contract  of 

Dollars,  all  that  certain  lot,  piece  or  parcel  of  land 

with  the  buildings  and  improvements  thereon  erected,  situate,  lying  and 

being  in and  bounded  and  described 

as  follows : 

(Description  here.) 

The  party  of  the  second  part,  in  consideration  of  one  dollar  paid  by  the 
party  of  the  first  part,  the  receipt  of  which  is  hereby  acknowledged,  and  also 
in  consideration  of  the  above  conveyance  by  the  party  of  the  first  part, 
agrees  to  grant  and  convey  to  the  party  of  the  first  part,  at  a  valuation  for 

the  purposes  of  this  contract  of Dollars, 

all  that  certain  lot,  piece  or  parcel  of  land  with  the  buildings  and  improve- 
ments thereon  erected,  situate,  lying  and  being  in 

and  bounded  and  described  as  follows :    

(Description   here.) 

The  premises  which  are  to  be  conveyed  by  the  party  of  the  first  part 
are  to  be  conveyed  subject  to  the  following  incumbrances : 


420  SCHEDULES   AND   POEMS. 

The  premises  which  are  to  be  conveyed  by  the  party  of  the  second  part 
are  to  be  conveyed  subject  to  the  following  incumbrances : 

The  difference  between  the  values  of  the  respective  premises,  over  and 
above  incumbrances,  shall  be  deemed,  for  the  purposes  of  this  contract,  to 

be  $ in  favor  of  the  party  of  the part, 

and  the  party  of  the part  agrees  to  pay  the  same  as 

follows :    

Each  of  the  parties  to  these  presents  hereby  agrees  to  convey  the  prop- 
erty above  described  as  sold  by  that  party,  free  from  all  incumbrances,  ex- 
cept as  above  specified,  and  to  execute,  acknowledge  and  deliver  or  cause 
to  be  executed,  acknowledged  and  delivered  to  the  other  party,  or  to  the 
assigns  of  the  other  party  (the  deed  to  be  drawn  in  each  case  at  the  cost  of 
the  party  of  the  first  part  thereto),  a  proper  warranty  deed  containing  full 
covenants  duly  executed  and  acknowledged  to  convey  and  assure  to  the 
grantee  an  absolute  fee  of  said  premises,  except  as  herein  stated. 

The  titles  to  be  given  and  accepted  hereunder  shall  be  such  as  the 

Company  will  approve  and  insure. 

Said  deeds  shall  be  delivered  and  exchanged  at  the  office  of 

on  19 at M. 

The  chandeliers,  gas  fixtures,  ranges,  heating  and  hot  water  apparatus, 

water  closets,  bath  tubs  and  other  plumbing 

now  on  said  premises  are  to  be  included  in  this  sale  and  in  the  warranty 
above  set  forth.1 

The  rents  of  the  said  premises,  insurance  premiums,  and  interest  on 
mortgages,  if  any,  shall  be  adjusted,  apportioned  and  allowed  up  to  the  day 
of  taking  title. 

Each  of  the  parties  hereto  assumes  the  risk  of  loss  or  damages  by  fire 
prior  to  the  completion  of  this  contract  on  the  premises  owned  by  them 
respectively.  AND  IT  is  UNDERSTOOD  that  the  stipulations  aforesaid  are  to 
apply  to  and  bind  the  heirs,  executors,  administrators,  successors  and  assigns 
of  the  respective  parties. 

And  for  the  true  and  faithful  performance  of  all  and  every  of  the 
covenants  and  agreements  above  mentioned,  the  parties  to  these  presents 

bind  themselves,  each  unto  the  other,  in  the  sum  of 

Dollars,  as  fixed,  settled  and  liquidated  damages,  to  be  paid  by  the  failing 
party,  and  which  said  sum  shall  constitute  a  specific  lien  on  the  premises 
of  the  failing  party. 

The  brokers  in  this  exchange  are 

representing  the  party  of  the  first  part,  and 

representing  the  party  of  the  second  part,  and  the  usual  commissions  are  to 
be  paid  to  said  brokers  by  their  respective  principals.2 

WITNESS  the  hands  and  seals  of  the  above  parties. 

[SEAL] 

[SEAL] 

Signed,  Sealed  and  Delivered 
in  the  presence  of 


1  See  Forms  17-28  for  further  provisions  which  may  be  used  -where  appropriate. 

2  If  the  broker  has  been   acting  for  both  sides,    and  wishes  to  assure  himself  that 
there  shall   be  no  question   concerning  his  double  employment,    this   clause   may   read   as 

follows :  "  The  parties  hereto  agree  that  is  the  broker  who  brought  about  this 

exchange,  and  that  he  acted  for  both  parties  hereto  In  doing  so,  and  each  of  the  parties 
hereto  agrees  to  pay  him  his   full   commissions  therefor   (or,   agrees  to  pny  him   the  sum 
of  $ as  broker's  commissions  therefor) ." 

s  Acknowledgment  may  be  added.     An  acknowledgment  makes  the  contract  admissible 
in  evidence  without  further  proof.     N.  Y.  Code  of  Civil  Pro.,  §  937. 


CONTRACTS     FOB     SALE     OP     REAL    ESTATE.  421 

Form  31.— Contract  for  Exchange  of  Property.   Chicago, 
Illinois.1 

CONTRACT  FOR  EXCHANGE. 


THIS  AGREEMENT,  entered  into  this day  of 

A.  D.,  19 ,  by  and  between 

of  

of  the  County  of and  State  of 

,  party  of  the  first  part, 

and of  the  County  of 

and  State  of party  of  the  second  part ; 

WITNESSETH:  That  the  party  of  the  first  part,  in  consideration  of  the 
covenants  and  agreements  of  the  party  of  the  second  part  hereinafter  set 
forth,  hereby  agree . . . . ,  upon  the  performance  by  said  second  party  of  said 
covenants  and  agreements,  to  convey  to  said  party  of  the  second  part  by 
General  Warranty  deed,  including  all  estates  of  home- 
stead and  all  rights  of  dower  therein,  at  a  consideration  of 

Dollars  ($ )  the  following  described  real  estate, 

situated  in  the  County  of and 

State  of  Illinois,  to-wit : 

(Description  'here.') 

Section   Township   

North,  Range ,  East  of  the  Third  Principal  Meridian. 

Subject  to   (1)   existing  leases  expiring 

the  purchaser  to  be  entitled  to  the  rents  accruing  after  the  delivery  of  the 
deed  hereunder;  (2)  all  taxes  levied  after  the  year  19....;  (3)  all  unpaid 
special  taxes  and  special  assessments  levied  for  improvements  not  com- 
pleted at  the  date  hereof,  and  any  unpaid  installments  of  special  taxes  and 
special  assessments  for  improvements  completed  at  the  date  hereof,  falling 
due  subsequent  to  the  date  hereof;  also  subject  to  any  party  wall  agree- 
ments of  record;  to  building  line  restrictions  and  building  restrictions  of 
record,  and  to 

The  party  of  the  first  part  further  agrees  to  pay  to  the  party  of  the 
second  part,  at  the  date  of  the  delivery  of  the  deeds  hereunder,  the  sum  of 
Dollars  ($ )  cash,  and 

And  the  party  of  the  second  part,  in  consideration  of  the  covenants  and 
agreements  of  the  party  of  the  first  part  above  specified,  hereby  agrees,  upon 
the  performance  by  said  first  party  of  the  said  covenants  and  agreements, 

to  convey  to  said  party  of  the  first  part,  by  a 

General  Warranty  deed,  including  all  estates  of  homestead,  and  all  rights 

of  dower  therein,  at  a  consideration  of 

Dollars  ($ )  the  following  described  real  estate  situated  in  the  County 

of   and  State  of  Illinois, 

to-wit :    

(Description  here.) 

Section Township 

North,  Range ,  East  of  the  Third  Principal  Meridian. 

Subject  to    (1)    existing  leases  expiring 

the  purchaser  to  be  entitled  to  the  rents  accruing  after  the  delivery  of  the 

1  This  form  is  the  one  adopted  by  and  Is  published  with  the  permission  of  The  Chi- 
cago Real  Estate  Board,  Chicago,  Illinois. 


422  SCHEDULES   AND   FORMS. 

deed  hereunder;  (2)  all  taxes  levied  after  the  year  19 ;   (3)  all  unpaid 

special  taxes  and  special  assessments  levied  for  improvements  not  completed 
at  the  date  hereof,  and  any  unpaid  installments  of  special  taxes  and  special 
assessments  for  improvements  completed  at  the  date  hereof,  falling  due 
subsequent  to  the  date  hereof ;  also  subject  to  *any  party  wall  agreements  of 
record;  to  building  line  restrictions  and  building  restrictions  of  record,  and 
to 

The  party  of  the  second  part  further  agrees  to  pay  to  the  party  of  the 
first  part,  at  the  date  of  the  delivery  of  the  deeds  hereunder,  the  sum  of. ... 
Dollars  ($ )  cash,  and 

IT  is  MUTUALLY  AGEEED,  that  each  party  hereto  is  to  furnish  the  other 
within  a  reasonable  time  from  the  date  hereof,  either  a  certificate  of  title 
issued  by  the  Eegistrar  of  Titles  of  Cook  County,  or  a  complete  merchant- 
able abstract  of  title,  or  merchantable  copy  thereof,  brought  down  to  cover 
this  date,  or  merchantable  title  guaranty  policy  showing  good  and  sufficient 
title  at  date  of  this  contract  in  the  respective  parties  hereto  to  the  property 
hereby  agreed  to  be  conveyed  by  them. 

IT  is  FURTHER  MUTUALLY  AGREED,  that  in  case  an  abstract  or  copy  be 
furnished,  the  party  so  receiving  same  shall  within  ten  days  after  receiving 
such  abstract  or  copy  deliver  to  the  other  party  or  his  agent  (together  with 
the  abstract)  a  note  or  memorandum  in  writing,  signed  by  him  or  his 
attorney,  specifying  in  detail  the  objections  he  makes  to  the  title,  if  any; 
or  if  none,  then  stating  in  substance  that  the  same  is  satisfactory. 

In  case  material  defects  be  found  in  said  title,  and  so  reported,  then  if 
such  defects  be  not  cured  within  sixty  days  after  such  notice  thereof,  this 
contract  shall  at  the  option  of  the  party  delivering  such  objections  become 
absolutely  null  and  void;  notice  of  such  election  to  be  given  to  the  other 
party;  but  the  party  delivering  such  objections  may  nevertheless  elect  to 
take  such  title  as  it  then  is,  and  in  such  case  the  other  party  shall  convey  as 
above  agreed;  provided,  however,  that  such  party  delivering  such  objections 
shall  have  first  given  a  written  notice  of  such  election,  within  ten  days  after 
the  expiration  of  the  said  sixty  days  and  tendered  performance  hereof  on  his 
part.  In  default  of  such  notice  of  election  to  receive  such  title  and  accom- 
panying tender  within  the  time  so  limited,  the  party  delivering  such  ob- 
jections shall,  without  further  action  by  either  party,  be  deemed  to  have 
abandoned  his  claim  upon  said  premises  and  thereupon  this  contract  shall 
cease  to  have  any  force  or  effect  as  against  said  premises,  or  the  title  thereto 
or  any  right  or  interest  therein,  but  not  otherwise. 

The  notices  required  to  be  given  by  the  terms  of  this  agreement  shall 
in  all  cases  be  construed  to  mean  notices  in  writing,  signed  by  or  on  behalf 
of  the  party  giving  the  same,  and  the  same  may  be  served  either  upon  the 
other  party  or  his  agent. 

If  the  taxes  and  assessments  to  be  paid  by  the  vendor  cannot  be  paid  at 
time  this  contract  is  to  be  closed  then  the  vendor  is  to  pay  same  on  or  before 
May  1st,  next  ensuing. 

IT  is  FURTHER  MUTUALLY  AGREED,  that  interest  on  encumbrances,  if 
any,  and  insurance  premiums  on  policies  held  by  mortgagees,  if  any,  shall  be 
adjusted  as  of  the  date  of  the  delivery  of  the  deeds  hereunder. 

IT  is  FURTHER  MUTUALLY  AGREED,  that  brokerage  fees  or  commissions 

shall  be  paid  to 

by  the  respective  parties  hereto  as  heretofore  agreed  by  them. 

All  deeds  shall  be  passed  and  this  negotiation  closed  at  the  office  of 

within  five  days  after  the  titles 

have  been  found  good. 

Time  is  declared  to  be  of  the  essence  of  this  agreement,  and  of  all  the 
conditions  hereof. 


CONTRACTS     FOR     SALE     OF     REAL,     ESTATE.  423 

This  contract  shall  be  held  by 

for  the  mutual  benefit  of  the  parties  concerned,  and  after  consummation 

thereof    shall  cancel  and 

retain  this  contract  permanently. 

IN  TESTIMONY  WHEREOF,  the  said  parties  hereto  have  set  their  hands 

and  seals,  the  day  and  year  first  above  written. 

[SEAL 

SEAI/ 

SEAL' 

. [SEAL* 


Form  32.— Deed  and  Money.1 

DEED  AND  MONEY. 


Application  No Escrow  No 

Chicago, 19 . 

CHICAGO  TITLE  AND  TRUST  COMPANY: 


hereby  deposit  with  you deed   from. 

to conveying 


.hereby  deposits  with  you  $. 


The  said  deed  is  to  be  filed  for  record  at  once  and  when  you  are  pre- 
pared to  issue  your  Owners'  Guarantee  Policy,  in  usual  form,  guaranteeing 
the  title  of  said  grantee subject  only  to : 

1.  RIGHTS  OR  CLAIMS  of  parties  in  possession,  not  shown  of  record, 
and  questions  of  survey. 

2.  MECHANICS'  LIEN  CLAIMS,  if  any,  where  no  notice  thereof  appears 
of  record. 

3.  SPECIAL  ASSESSMENTS  not  confirmed,  or  confirmed  after 

19 

4.  TAXES  for  the  year  19 .... 

5.  BUILDING  LINE   established   in   instrument   recorded   as   Document 


6.     RESTRICTIONS  contained  in  instrument  recorded  as  Document. 


7.  AGREEMENT  for  party  wall,  recorded  as  Document 

8.  MORTGAGE  INCUMBRANCE,  recorded  as  Document 

Amount  due  thereon Interest  since 

to  be  paid  by Old  Coupons? 

9.  SPECIAL  ASSESSMENT,  Warrant  No 

10.     ACTS  done  or  suffered  by,  or  judgments  against  said  grantee. 


You  are  then  hereby  authorized  and  directed  to  disburse  said  money  as 
follows :    

Is  there  any  commission  to  be  adjusted  through  this  escrow! 

Are  Fire  Insurance  Policies  to  be  brought  in? Are  Mortgage 

Clauses  to  be  attached? $ 

1  See  provisions   in   contracts   of  sale,    Forms   19   and  20. 


424  SCHEDULES   AND    FORMS. 

Are  Leases  to  be  brought  in? 

Are  Water  Taxes  paid? Is  receipt  to  be  produced?. 

Objections  Nos erased  before  signing. 

Deliver  Abstract  and  Policy  to 

Your  charges  are  to  be  paid  as  follows : 


Form  33.— Assignment  of  Contract. 

ASSIGNMENT. 


KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I, 

of ,  in  consideration  of 

Dollars  to  me  paid  before  the  sealing  and  delivery  of  these 

presents,  the  receipt  whereof  is  hereby  acknowledged,  have  sold,  assigned, 
transferred  and  set  over  and  by  these  presents  do  sell,  assign,  transfer  and 

set  over  unto of   , 

his  executors,  administrators  and  assigns,  to  his  and  their  own  proper  use 
and  benefit,  all  my  right,  title  and  interest  in  and  to  the  annexed  contract,  to 

have  and  to  hold  the  same  unto  the  said , 

his  heirs,  executors,  administrators  and  assigns  for  his  and  their  use  and 
benefit  forever;  subject,  nevertheless,  to  the  covenants  and  conditions  therein 
mentioned. 

And  I  hereby  authorize  and  empower  the  said 

upon  his  performance  of  the  said  covenants  and  conditions,  to  demand  and 

receive   of ,   the   vendor   mentioned   in   the 

annexed  contract,  the  deed  covenanted  to  be  given  in  the  said  contract,  in 
the  same  manner  to  all  intents  and  purposes  as  I  myself  might  or  could  do 

were  these  presents  not  executed;  and  I  hereby  direct  the  said 

to  execute  and  deliver  such  deed  to  said 

accordingly. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  and  seal,  this 

day.  of 19 

[SEAL] 

In  the  Presence  of, 


Form  34.— Assignment  of  Contract.    Without  Recourse. 

ASSIGNMENT. 


KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I 

of ,  in  consideration  of 

Dollars  to  me  paid  before  the  sealing  and  delivery  of  these 

presents,  the  receipt  whereof  is  hereby  acknowledged,  have  sold,  assigned, 
transferred  and  set  over,  and  by  these  presents  do  sell,  assign,  transfer  and 
set  over  unto ..of.. 


CONTEACTS  FOR  SALE  OP  HEAL  ESTATE.        425 

his  executors,  administrators  and  assigns,  to  his  and  their  own  proper  use 
and  benefit,  all  my  right,  title  and  interest  in  and  to  the  annexed  contract, 

to  have  and  to  hold  the  same  unto  the  said his 

heirs,  executors,  administrators  and  assigns  for  his  and  their  use  and  benefit 
forever;  subject,  nevertheless,  to  the  covenants  and  conditions  therein  men- 
tioned. 

And  I  hereby  authorize  and  empower  the  said 

upon  his  performance  of  the  said  covenants  and  conditions,  to  demand  and 

receive   of ,   the  vendor  mentioned   in  the 

annexed  contract,  the  deed  covenanted  to  be  given  in  the  said  contract,  in 
the  same  manner  to  all  intents  and  purposes  as  I  myself  might  or  could  do 
were  these  presents  not  executed. 

And  it  is  understood  and  agreed  that  this  assignment  is  made  without 
recourse  to  me. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  and  seal,  this 

day  of 19 

[SEAL] 

In  the  presence  of, 


Form  35.— Demand  for  Performance  of  Contract  of  Sale. 


To  MARGARET  BROWN, 
75  White  Avenue, 

Brooklyn,  New  York. 

You  will  please  take  notice  that  we  are  ready,  willing  and  prepared, 
and  always  have  been,  to  deliver  the  deeds  for  the  conveyance  of  the  prem- 
ises consisting  of  six  lots  at  the  Northeasterly  corner  of  2nd  Avenue  and 
69th  Street  in  the  Borough  of  Manhattan  of  the  City  of  New  York,  which 
you  have  contracted  to  purchase  by  a  written  agreement  dated  September 
1st,  1910,  and  we  hereby  demand  that  you  accept  such  deeds  and  pay  the 
balance  of  the  purchase  price  and  close  the  title  to  said  premises  and  per- 
form said  agreement  on  November  15th,  1910,  at  the  place  and  hour  men- 
tioned in  said  agreement,  to-wit,  at  the  office  of  Francis  H.  Willetts,  No.  123 
West  42nd  Street,  New  York  City,  at  one  P.  M. 

And  for  your  failure  to  comply  with  this  demand  you  will  be  held  liable 
according  to  law. 
Dated,  November  12th,  1910. 

JAMES  H.  McCALL. 


CHAPTER   XL. 
MISCELLANEOUS   FORMS. 

Any  provisions  of  the  following  form  not  desired  by 
either  the  broker  or  the  principal  may  be  omitted. 

Form  36.— Authority  to  Broker  to  Sell.1 

BROKER 'S  AUTHORIZATION  TO  SELL. 


I  hereby  employ  and  authorize 

real  estate  broker  (s),  to  sell  for  me,  the  premises  known  as  No 

in  the  city  of ,  being  a  lot feet  by 

feet  on  the side  of street feet  (East)  of 

street  (avenue)2,  upon  which  there  is  (a  three-story  and  base- 
ment brown  stone  dwelling,  or  three-story  frame  store  and  dwelling,  or  as 
the  case  may  be),  upon  the  following  terms  and  conditions: 

Gross  price,  $ payable  as  follows : 

$ when  contract  of  sale  is  signed ; 

$ by  the  purchaser  taking  same  subject  to  a  mortgage  for  that 

amount,  due bearing  interest  at %  per  annum,  payable 

(May  1)  and  (November  1) ; 

$ by  the  purchaser  giving  me  a  purchase  money  bond  and  mort- 
gage for  that  amount,  due bearing  interest  at.  ...  %  per  annum, 

payable and ,  and  containing  the  usual  interest, 

instalment,  tax,  assessment,  insurance  and  warranty  clauses  (or  special 
clauses  if  desired)  ; 

$ in  cash  when  the  deed  is  delivered. 

Warranty  deed  to  be  delivered  30  days  after  date  of  contract. 

Covenants  and  restrictions  against  the  premises 

Encroachments 

Fence  variations 

Railroad  consents 

For  bringing  about  a  sale  of  said  premises,  or  producing  a  purchaser 
ready,  willing  and  able  to  purchase  the  same,  on  the  above  terms,  or  on 
any  other  terms  or  conditions  to  which  I  shall  assent,  I  hereby  agree  to  pay 

said  broker(s)  the  sum  of  $ commissions,  (or  a  sum  equal  to. . .  .% 

on  the  gross  price  as  his  (their)  commissions). 

1  While  written   authority  is  not  necessary  in   all  Jurisdictions,    (see  Ch.   Ill   supra) 
still   it  is   always  wise,   even   at   some  inconvenience,    to  have   the   vendor   state  explicitly 
the   terms  on   which   he   will    sell.      If   any   dispute   should   then   arise   as   to    whether    the 
broker    has    produced    a    purchaser    on    the    principal's    terms,    the    dispute    will    not    have 
to   be   determined   upon   any  conflicting  evidence  as   to  what   the   terms   were,    as   is  often 
the   case   when   the   terms   are   given    to   the   broker  orally. 

2  Space  may  be  reserved  for  diagram  of  property. 

426 


MISCELLANEOUS     FORMS.  427 

Commissions  shall  be  due  and  payable  when  a  customer  is  produced 
upon  above  terms  and  conditions.1 

The  authority  hereby  given  shall  continue  for months. 

I  hereby  authorize  said  broker (s)  to  give  a  receipt  in  my  name  for  any 
deposit  received  on  a  sale  according  to  the  above  terms  and  conditions,  and 
also  authorize  him  (them)  to  sign  in  my  name  any  contract  he  (they)  may 
make  with  a  purchaser  of  said  premises  on  the  above  terms  and  conditions. 

In  the  event  of  the  sale  of  said  premises  by  said  broker(s)  or  by  any- 
one else,  including  myself,2  while  this  agreement  is  in  force,  I  agree  to  pay 
said  broker  (s)  the  full  commissions  above  agreed  upon.* 
Dated 


Form  37.— Exclusive  Agency  Contract.     Chicago,  Illi- 
nois.4 

AGENCY  CONTEACT. 


CHICAGO,  ILLINOIS 19 

I  HEREBY  GRANT  You,  for  a  period  of months  from  this 

date,  and  thereafter  until  this  agreement  is  revoked  by  notice  in  writing  de- 
livered to  you,  the  exclusive  right  to  sell  the  property  hereinafter  described; 
and  in  consideration  of  your  accepting  said  agency  and  endeavoring  to  sell 

said  property  I  agree  to  pay  you  a  commission  of per 

cent,  of  the  price  obtained  if  a  purchaser  is  procured  during  said  period,  by 
you  or  me  or  anyone  else,  upon  the  terms  named  or  upon  any  other  terms 
which  I  shall  accept. 

Said  property  is  known  as  Number Street, 

Chicago,  and  is  improved  with 


The  legal  description  is 

(Description  here.) 

The  price  of  said  property  is Dollars. 

The  terms  of  sale  are  as  follows :  The  sum  of 

Dollars  is,  upon  the  signing  of  an  agreement  of  sale,  to  be  paid  by  the  pur- 
chaser as  earnest  money,  and  said  agreement  and  earnest  money  are  to  be 

held  by 

in  escrow.  The  further  sum  of dollars 

is  to  be  paid  upon  acceptance  of  the  title  and  delivery  and  acceptance  of 
a  sufficient  warranty  deed  conveying  a  good  title  to  said  premises.  Both  of 
said  sums  are  to  be  paid  to  me  upon  delivery  of  said  deed. 

The  said  conveyance  is  to  be  made  subject  to  the  following  incum- 

brance,  viz. : dollars 

due 19 with  interest  at 

per  cent,  per  annum dollars 

1  See  §?   117-119  supra. 

*  Omit   this   provision   if  exclusive  agency  Is  not  desired.     Even   though    the  broker 
Is  given  the  exclusive  agency,   the  principal  may  always  sell   independently  of  the  broker, 
unless,   as   is   the  cnse  here,   he  precludes  himself  from  so  doing.     See  §§   2:19,   240  supra. 

3  See  also   Form   37   infra. 

*  Supplied    by    and   published   with    the   permission    of   the   Cook    County    Real    Estate 
Board.      When    this    form    is   used    the   "Agent's   Sale   Contract"    (Form   26)    is    annexed 
In  order  that  any  offer  made  on  the  property  may  be  In  the  exact  terms  of  the  exclusive 
agency. 


428  SCHEDULES   AND   FORMS. 

due   19 with  interest  at 

per  cent,  per  annum. 

The  principal  of  said  incumbrance  is  to  be  deducted  from  the  purchase 
price  above  named,  and  the  interest  thereon  is  to  be  prorated  as  of  the  date 
of  the  delivery  of  said  deed. 

Payment  of  dollars  of  said  pur- 
chase price  may  be  deferred  for  not  more  than years,  with 

interest  at per  cent,  per  annum,  evidenced  by  notes  secured  by 

trust  deed,  which  are  to  be  delivered  to  me  at  the  time  of  delivery  of  said 
deed.    The  principal  may  be  made  payable  on  or  before  a  given  date. 

I  agree  to  deliver,  at  my  option,  either  a  merchantable  abstract  of  title 
or  a  title  guarantee  policy  for  the  amount  of  the  above  named  purchase 
price,  covering  said  property  and  brought  down  to  the  date  of  the  agreement 
of  sale  above  provided  for;  and  within  five  days  after  the  acceptance  of  the 
said  title  I  agree  to  deliver  a  good  and  sufficient  warranty  deed  conveying 
said  property  in  accordance  with  such  agreement. 

Singular  pronouns  of  the  first  person  shall  be  read  as  plural  when  this 
agreement  is  signed  by  two  or  more  persons. 

[SEAL] 

[SEAL] 

ACCEPTED : 

[SEAL] 


Form  38.— Authority  to  Broker  to  Exchange  Property. 

BROKER'S  AUTHORIZATION  TO  EXCHANGE  PROPERTY. 


I  hereby  employ  and  authorize 

real  estate  broker  (s)  to  exchange  for  me,  premises  known  as  No * 

for  such  other  premises  as  shall  be  acceptable  to  me,  (or  for  premises  of  the 
following  nature:  state  same). 

Such  exchange  shall  be  made  upon  the  following  terms  and  conditions:1 
For  the  purposes  of  such  exchange  my  said  premises  shall  be  valued  at 


The  premises  hereby  authorized  to  be  exchanged  are  subject  to: 

Mortgages 

Covenants  and  restrictions 

Encroachments 

Fence  variations 

Railroad   consents 

Warranty  deeds  to  be  exchanged  30  days  after  date  of  contract  of 
exchange. 

For  bringing  about  such  exchange  on  above  terms  and  conditions,  or 
on  any  other  terms  and  conditions  to  which  I  shall  assent,  I  hereby  agree  to 

pay  said  broker(s)   $ commissions,  (or  a  sum  equal  to % 

on  the  gross  price  fixed  for  my  said  premises,  as  his  (their)  commissions), 
and  I  also  agree  that  said  broker  (s)  may  charge,  collect  and  receive  com- 
missions from  the  other  party  or  parties  to  such  exchange;  commissions  to 
be  due  and  payable  when  a  customer  is  produced  upon  above  terms  and 
conditions.* 
Dated.. 


1  Insert   particulars   as   in   Form   36. 

*  See  Form  36. 

»  See  Form  36  for  additional  provisions,  if  desired. 


MISCELLANEOUS     FORMS.  429 

The  following  contract  may  be  used  where  salesmen 
are  employed  on  commission,  this  commission  to  be  paid 
as  purchase  price  is  paid  to  the  principal. 

Form  39.— Salesman's  Contract. 

CONTRACT. 


MEMORANDUM  OF  AGREEMENT,  made  this day  of 

19 ,  between  EXECUTIVE  REALTY  COMPANY,  a 

corporation  incorporated  under  the  laws  of  the  State  of  New  York,  party  of 

the  first  part,  and party  of 

the  second  part; 

WITNESSETH:  That  the  party  of  the  second  part  for  and  in  considera- 
tion of  the  sum  of  One  Dollar,  to  him  in  hand  paid  by  the  party  of  the  first 
part,  the  receipt  whereof  is  hereby  acknowledged,  and  of  the  premises  and 
agreements  hereinafter  contained,  hereby  agrees  to  act  as  the  agent  of  the 
party  of  the  first  part  in  the  sale  of  lands,  upon  and  only  upon  the  following 
terms  and  conditions,  and  to  devote  his  entire  time,  attention  and  talents  to 
the  exercise  of  such  agency  in  strict  conformity  with  the  rules  and  regula- 
tions established  by  the  party  of  the  first  part  and  the  terms  and  conditions 
herein  contained,  and  such  additions,  amendments  or  modifications  of  the 
same  as  may  be  made  from  time  to  time  by  the  party  of  the  first  part. 

AND  IT  is  EXPRESSLY  UNDERSTOOD  AND  AGREED  by  and  between  the 
parties  hereto,  that  the  party  hereto  of  the  second  part  is  hereby  vested  with 
and  has  only  the  powers  hereinafter  specifically  granted,  and  has  and  is  to 
have  no  implied  powers,  and  is  not  to  act  or  assume  to  act  for  or  represent 
the  party  of  the  first  part,  except  as  herein  directed  and  authorized,  and  is 
not,  nor  shall  not  be  entitled  to  receive  any  other  or  different  or  additional 
compensation  than  that  herein  expressed. 

IT  is  HEREBY  EXPRESSLY  AGREED  by  and  between  the  parties  hereto  as 
follows : 

First. — That  the  party  of  the  second  part  shall  be  entitled  to  receive  a 

commission  at  the  rate  of per  cent,  (on  installment  sales  and 

on  cash  sales)  the  same  to  be  payable  as  follows:  IT  BEING 

EXPRESSLY  UNDERSTOOD  AND  AGREED  that  commissions  hereunder  are  to  be 
paid  only  at  the  times,  in  the  manner  and  as  hereinafter  mentioned. 

(1)  The  party  of  the  second  part  shall  be  entitled  to  receive  commis- 
sions only  after  the  regular  agreement   papers  and  physician's  certificate 
(when  required)   have  been  signed  and  delivered  to  the  party  of  the  first 
part,  and  such  commissions  are  payable  only  from  one-half  of  the  cash  re- 
ceipts from  the  respective  sales,  and  should  a  customer  default  in  payments 
before  the  said  party  of  the  second  part  has  received  his  full  commission  on 
a  sale  on  which  there  has  been  default  in  payments,  then  and  in  that  case 
the  party  of  the  second  part  shall  have  no  claim  for  further  commissions  on 
such  sale;  and  it  is  further  provided  that  when  the  said  party  of  the  second 
part  ceases  to  be  actively  engaged  in  the  sale  of  lands  for  the  party  of  the 
first  part  as  hereinafter  provided,  that  then  and  thereafter  commissions, 
hereunder  shall  be  payable  only  from  one-quarter  of  the  actual  cash  receipts 
from  such  sale. 

(2)  Commissions  on  cash  sales  or  any  sale  where  a  discount  is  allowed 
to  the  purchaser  on  the  whole  or  any  portion  of  the  purchase  price  shall  be 
computed  and  paid  only  on  the  purchase  price,  less  the  discount  for  cash, 
unless  the  agent  desires  to  have  his  commission  paid  by  installments  in  the 
same  manner  as  if  the  purchase  price  had  been  paid  in  installments,  then  the 


430  SCHEDULES   AND   FORMS. 

commission  is  to  be  computed  and  paid  on  the  full  purchase  price  of  the  lota 
sold  and  as  herein  provided. 

Second. — The  party  of  the  second  part  hereby  agrees  that  he  will  report 
daily  at  the  office  of  the  party  of  the  first  part  to  which  he  may  be  attached, 
and  in  case  he  shall  fail  to  do  so  for  three  consecutive  days,  he  shall  be 
deemed  to  be  no  longer  actively  engaged  in  the  sale  of  lands  for  the  party 
of  the  first  part,  and  shall  thereafter  be  entitled  to  receive  on  account  of 
commissions  only  one-quarter  of  the  receipts  from  lots  sold  by  him  as  here- 
inabove  provided. 

Third. — That  the  said  party  of  the  second  part  shall  have  no  authority 
whatsoever  to  alter,  modify  or  change  in  any  manner  any  of  the  agreements, 
contracts,  deeds  or  other  instruments  under  which  the  party  of  the  first  part 
offers  lands  for  sale  and  that  said  party  of  the  first  part  will  not  recognize 
any  alteration,  modification  or  other  change  of  any  agreement,  contract,  deed 
or  other  instrument  nor  any  claim  for  commissions  on  sales  made  otherwise 
than  upon  its  regular  terms. 

Fourth. — That  the  party  hereto  of  the  second  part  is  positively  pro- 
hibited from  publishing  or  circulating,  or  causing  to  be  published  or  cir- 
culated any  documents  or  advertising  matter  of  any  kind  whatsoever  relat- 
ing to  the  lands  which  the  party  of  the  first  part  offer  for  sale  unless  duly 
authorized  in  writing  by  the  party  of  the  first  part,  except  that  the  fore- 
going provision  shall  not  apply  to  any  matter  furnished  and  used  under 
direction  of  the  party  of  the  first  part. 

Fifth. — That  the  party  of  the  second  part  shall  incur  no  indebtedness 
of  any  kind  whatsoever  for  which  the  party  of  the  first  part  shall  be  in  any 
way  liable. 

Sixth. — All  moneys  received  or  collected  by  the  party  of  the  second  part 
are  to  be  securely  held  by  him  as  a  fiduciary  trust,  and  shall  be  in  no  case 
used  for  any  personal  purpose  whatsoever,  but  shall  immediately  be  paid 
over  to  the  party  of  the  first  part. 

Seventh. — The  party  of  the  second  part  must  report  all  business  to  the 
party  of  the  first  part  at  its  office  in  New  York  City  to  which  he  is  attached 
or  as  may  be  directed,  and  must  settle  all  accounts  as  often  as  required. 

Eighth. — The  ledger  accounts  of  the  party  of  the  first  part  shall  be 
competent  and  conclusive  evidence  of  the  state  of  accounts  between  the 
parties  to  this  contract. 

Ninth. — If  in  any  case  the  party  of  the  first  part  shall  deem  it  wise  to 
return  the  amounts  paid  in  on  account  of  any  contract  or  agreement  for  sale 
of  lands  and  cancel  the  same  by  reason  of  any  misrepresentations  on  the  part 
of  the  party  of  the  second  part  or  for  any  other  cause,  then  the  party  of  the 
second  part  shall  be  bound  to  repay  to  the  party  of  the  first  part  on  demand, 
the  amount  of  commission  received  on  account  of  the  contract  or  agreement 
so  canceled. 

Tenth. — Either  party  hereto  may  rescind  the  foregoing  contract  on  ten 
days'  notice  in  writing  to  that  effect,  and  upon  the  mailing  of  such  notice 
by  said  party  of  the  first  part  to  the  party  of  the  second  part  to  the  address 
hereinabove  contained,  all  the  rights  and  interests  of  said  party  of  the 
second  part  hereunder  shall  cease  and  determine,  except  as  herein  provided, 
but  it  is  expressly  understood  and  agreed  that  the  party  hereto  of  the  second 
part  shall  not  have  the  right  to  terminate  this  contract  unless  all  indebted- 
ness due  from  him  to  the  party  of  the  first  part  shall  have  been  settled  to 
its  satisfaction;  and  after  such  settlement  the  party  of  the  second  part  shall 
be  entitled  to  receive  the  balance  of  his  commission  on  lots  sold  prior  to  the 
termination  of  this  contract  at  the  rate  of  one-quarter  of  the  cash  receipts 
from  such  sales,  subject,  however,  to  all  the  conditions  and  agreements  in 
respect  to  commissions  herein  contained. 

Eleventh. — The  rights  of  the  party  of  the  second  part  in  the  foregoing 
contract  shall  not  be  sold  or  assigned. 


MISCELLANEOUS     FORMS.  431 

Twelfth. — This  contract  shall  bo  construed,  interpreted  and  enforced 
according  to  the  laws  of  the  State  of  New  York. 

Thirteenth. — Any  rules  of  the  party  of  the  first  part  or  any  additions, 
amendments  or  modifications  of  this  agreement  made  by  the  party  of  the 
first  part  hereto  as  herein  provided  shall  be  as  effective  as  if  herein  written 
and  contained  when  the  same  are  posted  on  the  bulletin  board  at  the  main 
office  of  the  party  hereto  of  the  first  part  in  the  City  of  New  York  or  the 
office  to  which  the  party  of  the  second  part  may  be  attached.  And  this  shall 
apply  as  well  to  the  rate  of  commissions  or  salary  payable  hereunder  as  to 
other  terms,  conditions  and  agreements  herein  contained. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  set  their  hands  and  seals 
the  day  and  year  first  above  mentioned. 

[SEAL] 

[SEAL] 

Sealed  and  Delivered 
in  the  Presence  of, 


Form  40.— Application  for  Loan.    New  York  City. 


APPLICATION  FOE  LOAN. 


Date No 

The  undersigned  desires  to  procure  a  mortgage  loan  on  premises  de- 
scribed below,  as  follows: 

First  Mortgage,  $ at % Years 

Bond  of  

Street  and  No 

Dimensions  of  Lot No.  of  Stories 

Dimensions  of  Building 

Description  of  Building 

Building  Material   

Building  finished  or  unfinished 

Age  of  Building 

Have  any  alterations  or  additions  been  made  in  the  last  six  months? 

BENT.  NO.  OF  BOOMS. 

(Estimate  rents  of  portion  of  building 
occupied  by  owners) 

Basement        

'.', 1st  Floor         

2nd  Floor        

3rd  Floor        

[',',] 4th  Floor        

5th  Floor        

Purpose  of  use 

Tenant  on  lease Monthly 

Present  1st  Mtge held  by due 

Present   2nd    Mtgos hold   by due 

No  payments  will  be  made  until  acceptable  fire  insurance  is  furnished. 


432  SCHEDULES     AND     FORMS. 

Plans  and  specifications  must  be  furnished  when  loan  is  desired  on  un- 
finished buildings. 

VALUATION. 

Land 

Building 


Total    

ASSESSED   VALUATION. 


Land  .. . 
Building 


Total    

If  this  loan  is  accepted  within days,  the  undersigned  agrees 

to  pay  to the  sum  of 

$ for  procuring  the  same  which  amount  shall  cover  charges 

for  examination  and  guarantee  of  title,  drawing  and  recording  papers,  sur- 
vey and  mortgage  tax. 
Name.  Address. 


Form  41.— Application  for  Loan.    Chicago,  Illinois. 

APPLICATION  FOE  LOAN. 


Chicago, 19 

To 

hereby  make  application  for  a  loan  of  $ 

for. years,  with  interest  at  the  rate  of 

per  centum  per  annum,  payable  semi-annually,  at  such  place  as  lender  may 

dictate ;  and  as  security  for  said  loan  will  give 

Promissory  Note  (together  with  Warrant  of  Attorney  to  confess  judgment 
in  case  of  default  in  payment  of  same),  secured  by  Deed  of  Trust  on  the 
following  described  Land  and  improvements,  to-wit : 


Said  land  being  in  the and  having  a 

front  of feet  on with  a  depth  of 

feet  to  a foot  alley. 

The  improvements  thereon  are 


The  present  cash  value  of  the  land  is $ 

The  present  cash  values  of  the  improvements  is $ 

Making  a  total  present  cash  value  of $ 

The  said  premises  are  free  from  incumbrance  of  any  and  every  kind  and 

description,  and ha. . .  .a  perfect  title 

thereto,  and  full  authority  to  incumber  or  sell  the  same agree  to 

furnish  a  complete  and  full  Abstract  of  Title  to  the  said  premises  for  ex- 
amination by  such  Attorney  or  Attorneys  as  you  may  select.  Said  Abstract 
of  Title  to  be  continued  so  as  to  show  the  loan  hereby  applied  for,  and  also 
to  insure  all  buildings  situated  upon  the  said  premises,  and  furnish  you  with 
the  Insurance  Policy,  with  clause  therein  making  the  loss  (if  any)  payable 
to  such  person  as  you  may  elect,  the  said  Policy  to  be  made  to  cover  the 
amount  and  time  of  the  loan  hereby  applied  for,  by  such  Insurance  Company 


MISCELLANEOUS    FORMS.  433 

as  you  may  select  or  approve also  agree  to  pay  all  charges  and  expenses 

for  the  examination  of  title  and  appraisal  of  said  property,  and  all  advances 
by  you  made  for  Abstracts  of  Title,  or  for  any  other  purpose  incident  to  the 
making  of  said  loan,  whether  loan  is  made  or  not. 

The  Abstract  of  Title  and  Insurance  Policies  furnished,  as  herein  agreed, 
to  be  held  by  you  or  your  assigns,  executors  or  attorneys,  at  the  risk  of  the 
undersigned,  during  the  continuance  of  said  loan,  until  the  same  is  fully 
paid. 


No 

Having  this  day  made  application  to for 

a  loan  of  $ upon  Real  Estate  security hereby  agree 

to  pay.  . .  .h per  cent,  on  said  amount  applied  for,  as  commis- 
sion ;  also  for  the  examination  of  the  Abstract  of  Title,  and  money  advanced 
to  the  undersigned,  and  all  other  expenses  incident  to  the  making  of  said 

Loan.    To  secure  said  amounts  a  first  lien  is  hereby  given  to  said 

on  all  written  instruments  and  personal  property  owned 

or  delivered  by  undersigned  to....h and  in  case  the  title  to,  or  the 

value  of,  the  real  estate  offered  as  security  is  insufficient  or  unsatisfactory  to 

said then,  in  such  case,  if  the  amount  of 

said  commissions,  advances  and  expenses  is  not  paid  within 

days  after  notice  of  the  rejection  of  said  loan  is  given  by  said 

to  the  undersigned,  then  said 

may,  at  any  time,  without  notice  to  the  undersigned, 

sell,  at  public  or  private  sale,  said  written  instruments  and  personal  property, 
or  either  or  any  part  thereof,  and  apply  the  proceeds  of  such  sale  to  the  pay- 
ment of  said  commissions,  expenses  and  advances. 

Dated..  ..19.. 


.19. 


accept  the  within  application.     When 

the  papers  securing  the  same  are  executed  you  will  draw  for  $ 

on and  forward  the  Notes  and  Deed,  when  recorded  to 


Form  42.— Application  for  Loan.    St.  Louis,  Missouri.1 

APPLICATION  FOR  LOAN. 


(Not  to  be  considered  unless  each  question  is  answered.) 
I  hereby  make  application  to  the  TITLE  GUARANTY  TRUST  Co.  for  a  loan 

of  dollars, 

payable    at per  cent,  interest  per 

annum,  to  be  paid : (principal  and  interest  to  be 

payable  at  said  Company's  office)  and  state  that  application  is  not  pending 
and  will  not  be  made  elsewhere,  until  an  adverse  decision  is  rendered;  said 
i  Form  of  the  Title  Guaranty  Trust  Co.  of  St.  Louis,   Mo. 


434  SCHEDULES     AND     FORMS. 

Company  to  have days  for  its  consideration,  and  is  hereby 

given  the  exclusive  right  to  take  the  proposed  mortgage. 

Location  of  property 

Description  of  improvements  and  j 
when  erected  I 


Location,  description  and  grade     i 
of  lot 


Are  street,  alley  and  sidewalk         ) 
paved?  J 

If  so,  with  what?  

Is  property  sewered  ? 

Are  there  gas  and  water  pipes?  . . . 


Mortgagor 's  name   

Give  address  and  business 

Who  would  you  name  as  reference?. 


By  whom  and  for  what  purpose     ) 

occupied?  ) 

If  tenant,  give  name,  business,        ) 

rental,  and  term  of  tenancy     J 

If  by  owner,  give  rental  value 

Have  there  been  any  repairs  or  alterations 
to  premises,  any  street,  sidewalk,  sewer 
or  alley  improvements  made  or  con- 
tracted for  within  six  months? 


Value  of  ground 

Value  of  buildings 

If  improvements  to  be  made,  state  cost. 
Date  of  purchase  and  cash  con-  ) 


sideration  paid 


Assessed  value  for  taxation  and 
amount  of  last  year 's  taxes 


Give  exact  statement  of  present  incumbrance, 
name  and  address  of  mortgagee,  amount 
and  rate. 


How  much  insurance  now  carried  ? 

Does  applicant  agree  to  have  property  \ 
insured  in  amount,  company  and  v 
terms  satisfactory  to  mortgagee?  ) 


In  whose  name  is  title  now  vested?. 


Wife  or  husband 's  full  name . 


Are  there  any  judgments,  taxes,  special  tax 
bills  or  other  liens  against  the  property 
not  enumerated  above? 


What  other  property,  if  any,  does  ) 


applicant  own? 
Give  value  and  incumbrance,  if  ) 


any. 


General  remarks : 


MISCELLANEOUS     FORMS.  435 

Full  certificate  of  title  by  TITLE  GUARANTY  TRUST  Co.,  fire  and  storm 
insurance  policies  payable  to  mortgagee  or  trustee,  covenant  to  pay  taxes, 
and  such  other  papers  as  are  desired  by  said  company,  are  to  be  furnished  by 
me.  And  I  do  hereby  agree  to  pay  to  said  TITLE  GUARANTY  TRUST  Co.  the 

sum  of dollars  for  expenses  in 

connection  with  this  loan,  which  amount  is  to  include  cost  of  examining 
property,  title,  preparing  and  recording  papers,  acknowledgments,  etc.  If, 
during  the  examination,  the  application  shall  be  withdrawn,  I  will  pay  the 

sum  of  dollars,  for  all  expenses 

incurred.  I  hereby  state  that  I  hold  or  will  acquire  the  undisputed  tith  in 
fee  simple  to  the  real  estate  herein  described,  and  the  proposed  mortgage  is 
to  be  the  first  lien  thereon;  that  I  do  not  owe  any  money  to  mechanics, 
builders  or  others  for  work  done  or  materials  furnished  upon  the  property 
not  otherwise  specified;  that  I  am  not  surety  upon  any  bond  which  can  be- 
come a  lien  upon  said  property,  and  that  these  statements  are  made  for  the 
purpose  of  securing  said  loan. 

I  promise  to  furnish  to  the  said  TITLE  GUARANTY  TRUST  Co.  a  satis- 
factory bond  insuring  erection  and  completion  of  improvements  and  indem- 
nity against  mechanics',  material  liens,  or  laborers'  liens,  judgments,  costs 
and  fees  of  any  description  that  may  be  had  against  the  premises  described, 
by  reason  of  my  failure  to  pay  and  satisfy  any  and  all  such  claims. 

THIS  LAST  CLAUSE  TO  APPLY  IN  CASE  THE  IMPROVEMENTS,  IF  ANY,  HAVE 
NOT  BEEN  COMPLETED  SIX  MONTHS. 

ANY  AGREEMENTS  MADE  HEREUNDER  BY  THE  TITLE  GUARANTY  TRUST 
CO.  SHALL  BE  ABROGATED  IP  THE  APPLICANT  HAS  CONCEALED  OR  MISREPRE- 
SENTED ANY  MATERIAL  FACT  IN  THIS  APPLICATION. 

Date Applicant. 

P.  O.  or  Street  Address 


Form  43.— Application  for  Loan.    Baltimore,  Maryland. 

APPLICATION  FOR  LOAN. 


To  the  TITLE  GUARANTEE  AND  TRUST  COMPANY:   (of  Baltimore,  Md.) 

The  undersigned  hereby  applies  to  your  company  for  a  first  mortgage 

loan  of dollars,  as  follows : 

(Strike  out  the  loan  not  desired.) 
A  straight  loan  for years,  with  interest  at 

, ,    (    half  yearly, 
per  cent.,  payable  j  quart£rlv. 

An  installment  loan,  payable  in  sixty  monthly  installments  of  $ 

each,  and  also  a  monthly  payment  of  one  month 's  proportion  of  the  ground 
rent,  taxes,  water  rent  and  insurance. 

(Fill  up  all  the  following  blanks.) 
Property    

Size  of'  Lot'.'.'.'.'.'.'.'.'. . ...  ..'.'. '.In  Fee? Ground  Bent  $ 

(  Redeemable 
/  Irredeemable. 

Brick  store  )    size  of  buii(iing Number  of  Rooms 

Frame  dwelling  ) 

(  month 
Number   of   Stories Rental,   $ Per  j  year 


436  SCHEDULES     AND     FORMS. 


Are  taxes  paid  up  ? 

Occupied  by  j  «™  jj*    When  purchased. 

Consideration  $ 

What  incumbrances  are  now  on  the  property? 


Title — In    whom 
Remarks :    . 


The  undersigned  agrees  to  pay  to  your  Company  $ 

for  its  services  for  inspection  of  the  property,  search  of  title,  drawing  legal 
papers,  etc.,  and  also  agrees  to  pay  the  lawful  charges  for  acknowledgments, 
recording,  etc.,  and  to  deposit  with  your  Company  fire  insurance  policies  in 
the  amount  and  companies  required.  If  the  undersigned  fails  to  take  the 
loan  after  it  has  been  accepted  by  the  Company,  the  undersigned  will  pay 
one-half  of  the  above  sum.  If  the  loan  is  declined  because  of  a  defect  in 
title  the  undersigned  agrees  to  pay  half  of  the  title  examination  fee.  It 
is  agreed  that  after  the  Company  accepts  this  application,  it  reserves 
the  privilege  of  declining  the  loan  afterwards,  for  any  reason  deemed  suf- 
ficient by  it. 
Date  19 Signature 

Telephone]  C'^dT- 

Address 

EEPOET  OF  EEAL  ESTATE  OFFICEE  ON  THE  ABOVE 
APPLICATION. 


I  have  examined  the  above  property  and  report  as  follows: 
m,  .        (  brick  store          -vr 

The  property  is  a  j  f  rame  dwemng    No'  of  stories  .................. 

The  rental  value  is  $  ......................................  per  month. 

Condition  of  the  property  —  are  the  walls  plumb?  ....................... 

I  consider  the  property  salable  at  public  auction  for  $  .................. 

and  recommend  that  j  ^ns  ingfaiimenf  loan   of  $  ........  be   granted. 


Eeal  Estate  Officer. 
Date  ____  :  .................  19  ____ 

An^nsTallment  |  loan  of  $  ...........  on  the  above  property  is  approved: 


Form  44.— Encroachment  Agreement.1 

ENCEOACHMENT  AGEEEMENT. 


AGREEMENT,   made   this  sixth  day   of   October,  in  the  year  Nineteen 
Hundred  and  Ten,  between  JOSEPH  SCOTT  and  ANNIE  SCOTT,  his  wife,2  of 

1  Available   for   the   protection    of   a   party   on   whose   premises   fences   or   retaining 
walls  encroach.     The  form  may  be  varied  to  suit  the  circumstances  of  other  cases. 

2  Though  the  title  Is  In  the  husband,  his  wife  should  join  In  the  agreement.     Some 
conveyancers  require  mortgagees  to  join  also. 


MISCELLANEOUS     FORMS.  437 

the  Borough  of  Brooklyn  of  the  City  of  New  York,  County  of  Kings  and 
State  of  New  York,  parties  of  the  first  part,  and  LIDA  MOORE,  of  the  same 
place,  party  of  the  second  part; 

WHEREAS,  the  said  parties  of  the  first  part  are  the  owners  in  fee  of  the 
lot  and  premises  known  as  No.  190  Suydam  Street  in  the  Borough  of  Man- 
hattan of  the  City  of  New  York,  being  a  lot  of  ground,  twenty-five  (25)  feet 
front  and  rear  by  one  hundred  (100)  feet  in  depth  on  the  southeasterly  side 
of  Suydam  Street  one  hundred  and  fifty  (150)  feet  southwesterly  from  the 
intersection  of  the  southeasterly  side  of  Suydam  Street  with  the  south- 
westerly side  of  Hanover  Avenue,  and  hereinafter  designated  as  the  lot  and 
promises  of  the  parties  of  the  first  part,  and  the  said  party  of  the  second 
part  is  the  owner  in  fee  of  the  lots  and  premises  known  as  Nos.  192  and  194 
Suydam  Street  in  the  Borough  of  Manhattan  of  the  City  of  New  York,  afore- 
said, being  a  plot  of  ground  fifty  (50)  feet  front  and  rear  by  one  hundred 
(100)  feet  in  depth,  on  the  southeasterly  side  of  Suydam  Street  one  hun- 
dred (100)  feet  southwesterly  from  the  intersection  of  the  southeasterly  side 
of  Suydam  Street  with  the  southwesterly  side  of  Hanover  Avenue  immedi- 
ately adjoining  to  and  on  the  northeasterly  side  of  said  lot  and  premises  of 
the  parties  of  the  first  part,  and  hereinafter  designated  as  the  lots  and 
premises  of  the  party  of  the  second  part;  and 

WHEREAS,  the  said  land  and  premises  of  the  parties  of  the  first  part,  are 
higher  than  the  adjoining  land  and  premises  of  the  party  of  the  second  part, 
and  a  wall  or  fence  has  been  erected  for  the  purpose  of  retaining  the  soil  of 
the  lot  and  premises  of  said  parties  of  the  first  part,  which  wall  or  fence, 
however,  stands  wholly  or  almost  wholly  on  the  lots  and  premises  of  the  party 
of  the  second  part,  and  runs  along  or  near  the  division  line  of  the  lots  and 
premises  of  the  parties  of  the  first  part  and  the  party  of  the  second  part, 
beginning  at  a  point  at  or  opposite  the  rear  end  of  the  house  erected  upon 
the  lot  and  premises  of  the  parties  of  the  first  part  and  running  to  or  beyond 
the  rear  end  of  the  lots  and  premises  of  the  parties  of  the  first  part  and  the 
party  of  the  second  part: 

Now  THEREFORE,  this  agreement  witnesseth,  that  in  consideration  of 
the  sum  of  one  dollar  and  other  good  and  valuable  considerations  in  hand 
duly  paid  to  the  said  parties  of  the  first  part,  the  receipt  whereof  is  hereby 
acknowledged,  the  said  parties  of  the  first  part  do  hereby  covenant,  stipu- 
late and  agree  that  the  said  parties  of  the  first  part  do  not  own  or  claim  to 
own  any  part  of  the  soil  within  the  boundaries  of  the  lots  and  premises  of 
the  party  of  the  second  part  upon  which  such  wall  or  fence  stands,  and  that  the 
said  parties  of  the  first  part  do  not  have  or  claim  to  have  any  easement, 
right,  title  or  other  interest  in  and  to  any  part  of  the  soil  within  the  bound- 
aries of  the  lots  and  premises  of  the  party  of  the  second  part  upon  which 
such  wall  or  fence  stands,  and  that  the  parties  of  the  first  part  do  not  have 
or  claim  to  have  any  right  or  privilege  to  have  such  wall  or  fence  or  any 
part  thereof  standing  or  remain  upon  the  lots  and  premises  of  the  party  of 
the  second  part,  or  any  part  thereof,  and  that  the  party  of  the  second  part, 
her  heirs  and  assigns,  may  at  any  time  remove  such  wall  or  fence  or  so  much 
of  such  wall  or  fence  as  is  within  the  boundaries  of  the  lots  and  premises  of 
the  party  of  the  second  part,  so  that  no  part  of  such  wall  or  fence  shall 
protrude,  extend,  be  or  remain  beyond  a  line  drawn  in  continuation  of  the 
southwesterly  side  of  the  house  on  the  lot  and  premises  of  the  parties  of  tho 
first  part  to  the  rear  of  the  lots  and  premises  of  the  party  of  the  second 
part;  and 

IT  is  FURTHER  MUTUALLY  AGREED  between  the  parties  hereto  that  no 
part  of  the  fee  of  the  soil  upon  which  said  wall  or  fence  or  any  part  thereof 
stands,  has  passed  to  or  is  vested  in  the  said  parties  of  the  first  part  or  any 
of  their  predecessors  in  title  nor  shall  pass  to  or  be  vested  in  the  said  parties 
of  the  first  part,  their  heirs  or  assigns. 


438  SCHEDULES     AND     FORMS. 

IN  WITNESS  WHEREOF,  the  parties  to  these  presents  have  hereunto  set 
their  hands  and  seals  the  day  and  year  first  above  written. 

JOSEPH  SCOTT.  [L.S.] 

ANNIE  SCOTT.  [L.S.] 

LIDA  MOORE.  [L.S.] 

In  the  presence  of, 

HORACE  T.  WALSH. 
THOMAS  L.  PATTERSON. 

(Acknowledgments  in  proper  statutory  form.) 


Form  45.— Encroachment  Agreement.1 


ENCROACHMENT  AGREEMENT. 


AGREEMENT,  made  this  twelfth  day  of  October  in  the  year  Nineteen 
Hundred  and  Ten,  between  SAMUEL  STRONG  and  SARAH  STRONG,  his  wife,2 
of  the  Borough  of  Brooklyn  of  the  City  of  New  York,  County  of  Kings  and 
State  of  New  York,  parties  of  the  first  part,  and  MARGARETH  BLACK,  of  the 
same  place,  party  of  the  second  part; 

WHEREAS,  the  said  parties  of  the  first  part  are  the  owners  in  fee  of  the 
lot  and  premises  known  as  No.  187  Thomas  Avenue  in  the  Borough  of 
Brooklyn  of  the  City  of  New  York  aforesaid,  and  the  said  party  of  the 
second  part  is  or  is  about  to  become  the  owner  in  fee  of  the  lot  and  premises 
known  as  No.  189  Thomas  Avenue  in  the  Borough  of  Brooklyn  of  the  City 
of  New  York  aforesaid,  immediately  adjoining  to  and  on  the  South  side  of 
said  lot  of  the  parties  of  the  first  part;  and 

WHEREAS,  the  stable  or  building  on  the  rear  of  said  lot  designated  as 
No.  189  Thomas  Avenue  encroaches  and  stands  partly  upon  the  lot  desig- 
nated as  No.  187  Thomas  Avenue: 

Now  THEREFORE,  this  agreement  witnesseth,  that  in  consideration  of 
the  sum  of  one  dollar  and  other  good  and  valuable  considerations  in  hand 
duly  paid  to  the  said  parties  of  the  first  part,  the  receipt  whereof  is  hereby 
acknowledged,  the  said  parties  of  the  first  part  do  hereby  grant  and  convey 
to  the  said  party  of  the  second  part,  her  heirs  and  and  assigns,  the  right  to 
have  said  stable  or  building  remain  in  its  present  position,  encroaching  or 
standing  partly  on  the  said  lot  of  the  parties  of  the  first  part,  and  the  right 
to  use  during  the  life  of  such  stable  or  building,  that  part  of  said  lot  of  the 
parties  of  the  first  part  upon  which  such  stable  or  building  encroaches  or 
stands  partly  thereon,  and  to  have  such  stable  or  building,  or  the  wall  or 
the  part  of  such  stable  or  building  so  encroaching  or  standing  partly  on  the 
said  lot  of  the  parties  of  the  first  part,  remain  so  standing  during  the  life 
of  such  stable  or  building,  and  no  longer. 

IT  is  FURTHER  MUTUALLY  AGREED  between  the  parties  hereto  that  no 
part  of  the  fee  of  the  soil  upon  which  stands  the  stable  or  building,  or  the 
wall  or  the  part  of  such  stable  or  building  so  encroaching  or  standing  partly 
on  the  said  lot  of  the  parties  of  the  first  part  shall  pass  to  or  be  vested  in 
the  said  party  of  the  second  part,  her  heirs  or  assigns,  by  virtue  of  these 
presents. 

1  Available  for  protection  of  party  whose  buildings  encroach  on  adjoining  land.     The 
form   may   be  varied   to  suit   the  circumstances   of  other  cases. 

2  Though  the  title  Is  In  the  husband,  his  wife  should  join  in  the  agreement.     Some 
conveyancers  require  mortgagees  to  Join  also. 


MISCELLANEOUS     FOBMS.  439 

IN  WITNESS  WHEREOF,  the  parties  to  these  presents  have  hereunto  sot 
their  hands  and  seals  the  day  and  year  first  above  written. 

SAMUEL  STEONQ.  [SEAL] 

SARAH  STRONG.  [SEAL] 

MAKGARETH  BLACK.  [SEAL] 

In  the  presence  of, 
WILLIS  T.  HEFLEY. 
ALLEN  F.  MOORE. 

(Acknowledgments  in  proper  statutory  form.) 


CHAPTER  XLI. 
FORMS  FOR  PLEADING.1 

Form  46.— Complaint  for  Recovery  of  Broker's  Commis- 
sions.   Short.     (First  Form.)2 

THE  CITY  COURT  OF  BROOKLYN. 


JULIUS  N.  KELLEY,  CHARLES  H.  MOLTER  and 
FREDERICK   D.   KELLEY, 
V. 
MILTON   BUCKLEY 


THE  PLAINTIFFS  COMPLAIN: 

I.  That  in  or  about  February,  1910,  the  defendant  employed  the  plain- 
tiffs to  find  for  him  a  purchaser  of  him  for  money  or  exchange  of  other  real 
estate,  a  certain  farm  situate  at  North  Leominster  in  the  State  of  Massa- 
chusetts, and  that  thereupon  the  plaintiffs  entered  upon  the  said  employ- 
ment and  worked  therein,  and  obtained  and  introduced  one  Manning  to  the 
defendant  as  the  purchaser  of  the  said  property,  and  he  agreed  with  the 
defendant  to  purchase  the  said  property  of  the  defendant  on  the  terms 
stated,  and  held  out  by  the  defendant,  through  the  plaintiffs,  and  to  take  a 
deed  of  conveyance  thereof,  and  the  bargain  was  struck  between  the  de- 
fendant and  said  Manning,  and  a  contract  of  purchase  was  entered  into. 

II.  That  the  value  and  agreed  price  of  the  said  services  by  the  plain- 
tiffs to  the  defendant  was  and  is  the  sum  of  $750,  but  the  defendant  refuses 
to  pay  the  same. 

WHEREFORE,  the  plaintiffs  pray  for  judgment  against  the  defendant  for 
the  sum  of  $750  with  interest  and  costs. 

JOHN  J.  GAYNOR, 

Atty.  for  Plffs. 
(Verified.) 


Form  47.— Complaint  for  Recovery  of  Broker's  Commis- 
sions.   Short.     (Second  Form.) 

THE  CITY  COURT  OF  BROOKLYN. 


CHARLES  B.  RODNEY  and  GEORGE  T.   STEPHENS, 

Plaintiffs, 
against 

JAMES   BUNNELL, 

Defendant. 
J 

The  complaint  of  the  plaintiff  respectfully  shows  to  this  Court: 

I.     That  at  the  times  hereinafter  mentioned  the  plaintiffs  were,  and 

1  See   Chs.    XXXIV    and   XXXV   supra. 

2  See  also  Corbin's  New  Jersey  Forms.  No.  896. 

440 


FORMS   FOB   PLEADING.  441 

still  are,  copartners  in  trade,  as  real  estate  agents  and  brokers,  doing 
business  as  such  in  the  City  of  Brooklyn,  under  the  firm  name  and  style  of 
Rodney  and  Stephens. 

II.  That  on  or  about  the  first  day  of  April,  1910,  the  plaintiffs  ren- 
dered certain  services  to  the  defendant  at  his  request,  as  such  real  estate 
agents  and  brokers,  in  and  about  the  selling  of  certain  property  situate  on 
the  Eastern  Boulevard  and  Kings  Highway  in  the  Town  of  Utrecht,  Nassau 
County,  for  which  services  defendant  agreed  to  pay  plaintiff  two  thousand 
dollars  as  commissions. 

III.  That  no  part  of  said  sum  has  been  paid,  although  payment  thereof 
has  been  demanded. 

WHEREFORE,  plaintiffs  demand  judgment  against  the  defendant  for  the 
sum  of  two  thousand  dollars  with  interest  thereon  from  April  1,  1910,  and 
costs  of  this  action. 

DOYLE  &  MARSHALL, 

Plaintiffs'  Attorneys, 
Office  and  Post  Office  Address: 

4  and  5  Court  St.,  Brooklyn,  N.  Y. 
(Duly  verified.) 

Form  48  —Complaint  for  Recovery  of  Broker's  Compen- 
sation.   (Two  Counts.)1 

SUPREME  COURT,  COUNTY  OF  RICHMOND. 


ALLEN  R.   CALLAHAN, 

Plaintiff, 
against 

JACK  M.  HASKELL  and  WALTER  N.  BEARDSLEY, 

Defendants. 


COMPLAINT. 

The  plaintiff  above  named,  through  his  attorney,  Willis  Clark,  com- 
plains of  the  above-named  defendants  and  alleges: 
FOR  A  FIRST  AND  SEPARATE  CAUSE  OF  ACTION  : 

I.  That  the  plaintiff  is  a  resident  of  the  County  of  Richmond,  Borough 
of  Richmond,  City  of  New  York. 

II.  That  the  plaintiff  at  all  times  hereinafter  mentioned  was  and  still 
is  an  attorney  and  counselor  at  law  duly  qualified  as  such,  with  an  office  and 
place  of  business  in  the  Borough  of  Manhattan,  New  York  City. 

III.  That  between  the  1st  day  of  January,  1910,  and  the  commence- 
ment of  this  action,  plaintiff  performed  professional  services  for  said  de- 
fendants at  their  special  instance  and  request,  and  upon  their  promise  to  pay 
therefor,  which  services  were  reasonably  worth  the  sum  of  $3,604.38,  and  the 
plaintiff  between  said  dates  in  performance  of  said  professional  services  at 
the  request  of  the  defendants,  paid  out  and  advanced  for  and  in  behalf  of 
said  defendants,  the  sum  of  about  $1,000. 

IV.  That  by  reason  of  the  performance  of  said  professional  services 
there  became  due  to  said  plaintiff  the  sum  of  $3,604.38,  which  sum  defendants 
have  not  paid,  and  refuse  to  pay,  although  plaintiff  has  duly  demanded  suoh 
payment. 

FOR  A  SECOND  AND  SEPARATE  CAUSE  OF  ACTION: 

I.     That  the  plaintiff  is  a  resident  of  the  County  of  Richmond,  Borough 
of  Richmond,  City  of  New  York. 

i  This  is  permissible  even  under  Code  pleading.     Logan  v.  Whltley,    129  App.   Dlr. 
666    (N.   Y.    1908). 


442  SCHEDULES     AND     FORMS. 

II.  That  the  plaintiff,  at  all  times  hereinafter  mentioned  was  and  still 
is  an  attorney  and  counselor  at  law  duly  qualified  as  such,  with  an  office 
and  place  of  business  in  the  Borough  of  Manhattan,  New  York  City. 

III.  That  between  January  1st,  1910,  and  the  commencement  of  this 
action,  the  plaintiff,  Allen  K.   Callahan,  performed  services  as  agent  and 
broker  in  causing  the  sale  for  defendants  of  about  4,500  acres  of  land,  for 
the  price  of  $36,043.80,  situated  in  Oakham  township,  St.  Lawrence  County, 
New  York,  which  land  was  held  and  owned  by  defendants  at  all  times  herein 
mentioned,  until  about  April  15,  1910. 

IV.  That   said   services   were    performed   at   the   request   of   the   de- 
fendants and  for  the  reasonable  value  and  agreed  compensation  of  10%  of 
the  selling  price  of  said  land,  which  sum  said  defendants  promised  and 
agreed  to  pay  to  the  plaintiff  herein. 

V.  That  by  reason  of  said  sale  there  became  due  to  the  plaintiff  the 
sum  of  $3,604.38,  which  sum  the  defendants  have  not  paid  and  refuse  to  pay, 
although  plaintiff  has  duly  demanded  such  payment. 

WHEEEFORE,  plaintiff  demands  judgment  against  defendants  for  the 
sum  of  $3,604.38  with  interest  from  April  15,  1910,  together  with  the  costs 
and  disbursements  of  this  action. 

WILLIS  CLARK, 

Attorney  for  plaintiff. 
Office  and  Post  Office  Address: 

No.  27  William  St.,  New  York  City. 
(Verified.) 


Form  49.— Motion  for  Interpleader  in  New  York  City 
Municipal  Court.1 


MUNICIPAL  COURT  OF  THE  CITY  OF  NEW  YORK, 

BOROUGH  OF .    DISTRICT. 


John  S.  Bobins  and  Henry  A.  Robins,  a  copartner- 
ship trading  under  the  firm  name  and  style  of 
John  S.  Bobins, 


against 


Plaintiffs, 


Frederick  Lake, 

Defendant. 


OEDER  TO  SHOW 
CAUSE. 


On  the  annexed  affidavit  of  Frederick  Lake  verified 

and  on  all  the  papers  and  proceedings  herein,  it  is 

hereby 

ORDERED,  that  the  plaintiffs  and  George  Murray,  doing  business  under 
the  name  of  Geo.  Murray  Bealty  Co.2  show  cause  before  the  Municipal  Court 

of  the  City  of  New  York,  Borough  of 

District,  at  the  Court  Boom  thereof,  No in  the  Borough  of 

of  the  City  of  New  York  on  the day  of 

19. . .  .at  nine  o  'clock  in  the  forenoon,  or  as  soon 

thereafter  as  counsel  can  be  heard,  why  an  order  should  not  be  made  and 
entered  herein  permitting  the  defendant  to  deposit  with  the  court  the  sum 
of  $93.75,  and  substituting  the  said  George  Murray  doing  business  under  the 

»  See  Ch.  rxxv.  The  Italicized  portions  of  this  form  are  those  which  vary  with  the 
particular  conditions. 

*  The  other  broker  who  claims  the  commission. 


FORMS   FOB   PLEADING.  443 

name  of  Geo.  Murray  Bealty  Co.  in  his  place  as  a  party  defendant  in  this 
action,  and  discharging  the  defendant  from  liability  to  either  the  plaintiffs 
in  this  action  or  the  said  George  Murray  doing  business  under  the  name  of  Geo. 
Murray  Bealty  Co.  upon  the  payment  into  court  of  the  said  sum  of  $93.75  or 
to  such  person  or  persons  as  the  court  may  direct;  and  that  the  said  George 
Murray  doing  business  under  the  name  of  Geo.  Murray  Bealty  Co.  be  re- 
quired to  appear  in  this  action  to  answer  the  complaint  herein,  in  the  same 
time  that  the  defendant  herein  is  required  to  answer  the  summons,  and  that 
the  money  so  paid  into  court  by  the  defendant  herein  shall  be  paid  to  the 
plaintiff  in  case  of  the  failure  of  said  George  Murray  to  appear  and  answer, 
and  for  such  other  and  further  relief  as  may  be  just. 

And  it  appearing  that  there  is  sufficient  reason  for  same,  service  of  a 
copy  of  this  order  and  of  the  annexed  affidavit  on  the  said  George  Murray 

and  on  either  one  of  the  plaintiffs  herein,  on  or  before 

19 . . . . ,  shall  be  sufficient  service  and  notice. 

Dated, 19 

J.  M.  C. 

Form  50.— Motion  for  Interpleader.     Supporting  Affi- 
davit.1 

MUNICIPAL  COURT  OF  THE  CITY  OP  NEW  YORK, 

BOROUGH  OF  DISTRICT. 


John  S.  Robins  and  Henry  A.  Bobins,  a  copartner- 
ship trading  under  the  firm  name  and  style  of 
John  S.  Bobins, 


against 
Frederick  Lake, 


Plaintiffs, 


Defendant. 


^AFFIDAVIT. 


STATE  AND  CITY  OF  NEW  YORK         ) 

BOROUGH  OF v  as. : 

COUNTY  OF ) 

Frederick  Lake,  being  duly  sworn,  says:  I  am  the  defendant  above- 
named;  the  summons  and  complaint  herein  was  served  on  me  on 

19 ....  and  the  return  day  thereof  is 19 ... 

(State  the  facts  of  the  controversy,  as  for  instance:)  The  action  is  brought 
to  recover  a  commission  for  the  exchange  of  certain  premises  which  I  owned 
on  Mott  Avenue,  Union  Terrace,  Queens  County,  for  certain  prtmises  owned 
by  the  Decker  Construction  Company  on  Perry  Street,  Wyckoff  Park,  Queens 
County.  The  plaintiff  claims  to  be  entitled  to  the  sum  of  $92.50  commission 
for  the  exchange  of  the  aforesaid  premises.  A  written  contract  for  the  ex- 
change of  the  aforesaid  premises  was  entered  into  and  signed  by  me  and  the 

said  Decker  Construction  Company,  which  contract  is  dated 19. . . . 

in  the  presence  of  one  George  Murray,  who  does  business  under  the  name  of 

Geo.  Murray  Bealty  Co.  who  has  a  real  estate  office  at 

in  the  Borough  of 

and  who  makes  a  similar  claim  for  commissions  for  the  exchange  of  the  said 
premises.  Said  George  Murray  is  not  a  party  to  this  action,  and  makes  a 
demand  against  me  for  the  same  debt  as  the  plaintiff,  without  collusion  with 
me,  and  I  am  ready  and  willing  to  pay  the  aforesaid  sum  of  $92.50  or  the 
sum  of  $93.75,  which  is  the  proper  computation  of  said  commission,  as  a 

1  The  Italicized  parts  of  this  form  are  suggestive  and  will  vary  with  the  conditions. 


444  SCHEDULES     AND     FORMS. 

commission  for  the  exchange  of  said  premises,  to  the  person  rightfully  en- 
titled thereto.  I  cannot  safely  determine  to  which  of  said  claimants  this 
money  should  be  paid,  and  I  am  ready  and  willing  to  pay  the  same  into 
court  upon  such  terms  as  to  costs  and  payments  into  court  of  the  amount  of 
said  claim  as  may  be  just  and  directed  by  this  court,  upon  my  being  dis- 
charged from  liability  to  either  claimant,  and  said  George  Murray  doing 
business  under  the  name  of  Geo.  Murray  Bealty  Co.  being  substituted  as 
defendant  in  this  action  in  my  place. 

I  therefore  ask  for  an  order  to  show  cause  why  an  order  should  not  be 
made  permitting  me  to  deposit  with  the  court  the  sum  of  $93.75  and  sub- 
stituting the  said  George  Murray  doing  business  under  the  name  of  Geo. 
Murray  Eealty  Co.  in  my  place  as  a  party  defendant  in  this  action,  and  dis- 
charging me  from  liability  to  either  the  plaintiffs  in  this  action  or  to  said 
George  Murray  doing  business  under  the  name  of  Geo.  Murray  Eealty  Co. 
or  to  such  person  or  persons  as  the  court  may  direct,  and  that  the  said  George 
Murray  doing  business  under  the  name  of  Geo.  Murray  Eealty  Co.,  be  re- 
quired to  appear  and  do  appear  in  this  action  to  answer  the  complaint  there- 
in in  the  same  time  that  I  am  required  to  answer  the  summons,  and  that  the 
money  so  paid  into  court  by  me  shall  be  paid  to  the  plaintiffs  in  case  of  the 
failure  of  the  said  George  Murray  to  appear  and  answer,  and  for  such  other 
and  further  relief  as  may  be  just. 

I  therefore  ask  that  the  order  to  show  cause  to  be  made  herein  be  made 

returnable  on 19 ....    for  the  reason  that  I  have  been 

informed  by  my  attorney  and  believe  that  an  order  for  an  interpleader  must 
be  obtained  before  the  return  day  of  the  summons  in  the  action,  and  that 
service  of  a  copy  of  said  order  to  show  cause  and  of  this  affidavit  on  the 
said  George  Murray  and  on  either  of  the  plaintiffs  herein  on  or  before. . . . 

19 ....  shall  be  sufficient  service  and  notice. 

Sworn  to  before  me  this: 
day  of 19 


Form  51.— Order  of  Interpleader. 


MUNICIPAL  COUBT  OF  THE  CITY  OF  NEW  YORK, 

BOROUGH  OF.  .  DISTRICT. 


John  S.  Eobins  and  Henry  A.  Eobins,  a  copartner- 
ship trading  under  the  firm  name  and  style  of 
John  S.  Eobins, 

Plaintiffs, 
against 

Frederick  Lake, 

Defendant. 


On  reading  and  filing  the  affidavit  of  Frederick  Lake,  verified 

19 ....  and  the  order  to  show  cause  dated 

19 with  proof  of  the  due  service  thereof  as  required  by  said  order,  and 

on  all  the  papers  and  proceedings  herein,  and  the  plaintiffs  appearing  by 

,  their  attorney,  and  George  Murray  appearing  by 

,  his  attorney,  and  after  hearing , 

attorney  for  the  defendant,  in  support  of  the  motion 

ORDERED,  that  the  defendant  be  permitted  to  deposit  with  the  Clerk  of 
this  Court  the  sum  of  $93.75  and  that  upon  the  payment  of  such  sum  as 

aforesaid  on  or  before 19. ...  the  said  George  Murray 

doing  business  under  the  name  of  Geo.  Murray  Eealty  Co.  be  and  he  hereby 
is  substituted  as  defendant  in  this  action  in  the  place  of  said  defendant 


FORMS   FOB   PLEADING.  445 

Frederick  Lake  and  that  the  said  Frederick  Lake  be,  and  he  hereby  is  there- 
upon discharged  from  liability  to  either  the  plaintiffs  in  this  action  or  the 
said  George  Murray  doing  business  under  the  name  of  Geo.  Murray  Realty 
Co.  on  account  of  the  cause  of  action  for  which  this  action  is  brought; 
and  it  it  is  further 

ORDERED,  that  the  said  George  Murray  doing  business  under  the  name  of 
Geo.  Murray  Realty  Co.  be,  and  he  hereby  is  required  to  appear  in  this  action 
to  answer  the  complant  herein  in  the  same  time  that  the  above-named  de- 
fendant Frederick  Lake  is  required  to  answer  the  summons,  and  that  the 
money  so  paid  into  Court  by  the  defendant  Frederick  Lake,  shall  be  paid  to 
the  plaintiffs  in  case  of  the  failure  of  said  George  Murray  to  appear  and 
answer. 

Dated, 19 

J.  M.  C. 


Form  52.— Complaint  after  Interpleader.1 

CITY  COURT  OF  BROOKLYN. 


CHARLES  B.  RODNEY  and  GEORGE  T.  STEPHENS, 

Plaintiffs, 
against 


COMPLAINT. 

THE   RIDGWAY   DRIVING    CLUB, 

Defendant. 


SUPPLEMENTAL 


The  supplemental  complaint  of  the  plaintiffs  respectfully  shows  to  this 
Court : 

I.  That  at  the  times  hereinafter  mentioned,  the  plaintiffs  were  and  still 
are  copartners  in  trade,  as  real  estate  agents  and  brokers,  doing  business  as 
such  in  the  City  of  Brooklyn,  under  the  firm  name  and  style  of  Rodney  and 
Stephens. 

II.  That  on  or  about  the  first  day  of  April,  1910,  the  plaintiffs  ren- 
dered certain  services  to  one  James  Bunnell,  at  his  request,  as  such  real 
estate  agents  and  brokers  in  and  about  the  selling  of  certain  property  situ- 
ate on  the  Eastern  Boulevard  and  Kings  Highway  in  the  Town  of  Utrecht, 
Nassaii  County,  for  which  services  the  said  James  Bunnell  agreed  to  pay 
plaintiffs  the  sum  of  $2,000  as  commissions. 

III.  That  no  part  of  said  sum  has  been  paid  although  payment  thereof 
has  been  demanded. 

IV.  That  upon  application  of  said  James  Bunnell  and  upon  notice 
thereof  to  the  parties  hereto,  an  order  was  made  by  this  court  dated  the  19th 
day  of  July,   1910,  by  which  it  was  among  other  things  ordered  that  the 
defendant,  the  Ridgway  Driving  Club  be  substituted  as  defendant  in  this 
action  in  place  of  said  James  Bunnell,  as  by  reference  to  said  order  will 
more  fully  appear. 

WHEREFORE,  plaintiffs  demand  judgment  against  the  defendant  for  the 
sum  of  two  thousand  dollars,  with  interest  thereon  from  April  1,  1910,  be- 
sides the  costs  of  this  action. 

DOYLE  &  MARSHALL, 

Plaintiffs'  Attorneys, 
Office  and  Post  Office  Address: 

4  and  5  Court  St.,  Brooklyn,  N.  Y. 
(Duly  verified.) 

1  See  Form  47  supra. 


GENERAL  INDEX. 

[REFERENCES  ABE  TO  PAGES.] 


Abandonment  of  Broker  by  Customer,  135,  182,  183. 

of  Customer  by  Broker,  102,  103,  173,  174. 
Ability  of  Pu- -haser,  161-165. 
Acceptance  of    )ffer,  Qualified,  168. 

of  Proceeds  Test  of  Principal's  Liability,  262-265,  267. 
Acknowledgment  of  Contract  of  Sale,  362. 

Forms,  403,  412. 
Acreage  Price,  368. 

Actions,  213,  321-326,  330-352.     (See  also  Pleading.) 
Forms,  440-445. 

Broker's,  213,  330-340. 

for  Fraud,  321-326. 

"    Rescission,  322,  323. 
Acts  of  Broker,  Adverse  to  Principal,  59-68,  151,  152,  272,  279. 

Faith  of,  54-56,  59-68,  91,  150-154,  191,  192,  256-258,  272,  273.     (See  also 
Good  Faith.) 

Fraudulent,  50,  51,  67,  68,  91,  258,  265,  273,  292,  293,  305-309.     (See  also 
Fraud  of  Broker.) 

Pleading,  340. 

Principal  Bound  by,  36,  37,  267-270. 
Not  Bound  by,  43,  44,  47. 

Ratification  of,  45,  51,  52,  65,  71,  72,  109-113,  262-265,  267,  319,  320. 
(See  also  Ratification.) 

Unauthorized,  37,  45,  106-113,  267,  268,  282-286. 

Which  Are  Not  Usually  Fraudulent,  291-304. 
Administrator,  Liability  for  Commissions,  217,  218. 

Power  to  Make  Contract  of  Sale,  360,  361. 

Signature  to  Contract  of  Sale,  360,  361. 
Advertising  by  Broker,  83,  84,  94,  134,  135. 
Agency.     (See  Authority  of  Broker.) 

Exclusive,  100,  101,  251,  252. 
Forms,  426-428. 

Renting,  75-77. 

Sub,  70-74. 

Termination  of,  24,  33,  76,  79-92.     (See  also  Termination.) 

447 


448  GENERAL   INDEX. 

[References  are  to  pages.] 

Agent.     (See  Broker.) 
Agreements.     (See  also  Contracts.) 

Commission,  50,  63,  154,  168-170,  179,  180,  200,  201,  223-228,  235,  236, 
241-248. 

Forms,  426-431. 
Absence  of,  228-237. 

As  Affected  by  Special  Conditions,  168-170,  179,  180,  200,  201. 
Contingent,  243-245. 
Custom  as  Part  of,  229,  230. 
Deferring  Commissions,  241-248. 
Enforcement  of,  50. 
Express,  222,  223. 

for  All  in  Excess  of  Fixed  Price,  63,  154,  224-228,  244-246. 
Rules  of  Real  Estate  Boards  as  Part  of,  235,  236. 
Special,  115,  118,  121-124,  128,  146,  170,  178,  179,  218-220,  223-228, 

241-248,  338,  339. 

to  Wait  until  Title  is  Closed,  245-247. 
Unsupported,  Deferring  Commissions,  241-243. 
Valid,  Deferring  Commissions,  243. 
Encroachment,  369,  370. 

Forms,  436-439. 

Not  to  be  Performed  within  a  Year,  31-35. 
Oral,  34,  35,  47,  356,  357,  363,  364. 
Unlawful,  of  Agent,  329. 
Alien's  Right  to  Make  Contract  of  Sale,  360. 
All  in  Excess  of  Fixed  Price,    63,  154,  224-228,  245,  246. 
Allegation  of  Authority,  336,  337. 

of  Performance,  337,  338. 
Alternative  Contracts,  171- 17$. 

Amount  of  Commissions,  63,  154,  204,  207-209,  222-237,  245,  246. 
All  in  Excess  of  Fixed  Price,  63,  154,  224-228,  245,  246. 
as  Affected  by  Rules  of  Real  Estate  Boards,  235,  236. 
"    Fixed  by  Agreement,  223-228. 
"       "        "     Custom,  228-237.     (See  also  Custom.) 
in  Absence  of  Agreement,  228-237. 
"        "         "    Custom,  236,  237. 
Measure  of,  223,  224. 
on  Leases,  207-209. 
"    Loans,  204. 

When  Agent  is  Not  a  Broker,  231,  232. 
Application  for  Loan,  28. 
Forms,  431-436. 

Appointment  as  Agent,  Powers  Conferred  by,  36-38,  43-45,  70. 
Approval  Clause  in  Contract  of  Sale,  377,  378. 
Assertions  as  to  Value  of  Property,  300-304. 
Assignment  of  Contract  of  Sale,  Forms,  418,  419,  424,  425. 


GENERAL   INDEX.  449 

[References  are  to  pages.] 

Authority  of  Broker,  26-47,  69-92.     (See  also  subheads.) 

Forms,  426-431. 

Allegation  of  in  Complaint,  336,  337. 
as  to  Cancellation  of  Contract,  46. 
"    "    Third  Parties  after  Revocation,  92. 
Conferred  by  Appointment  as  Agent,  36-38,  43-45,  70,  115-117. 

"  "    Instructions  to  Sell,  37,  115-117,  187. 

Duration  of,  31-35,  80-92,  147,  148. 
Exclusive,  100,  101,  251,  252. 

Forms,  426-428. 

Extent  of  Ordinary,  36-45,  75-78. 
Form  of  Authorization,  26-35. 
Must  be  Exercised  in  Reasonable  Time,  81-84,  147. 

"     Not  be  Exceeded,  257,  258.     (See  also  Unauthorized  Acts.) 
Naked,  80. 

Oral,  26-35,  39-42,  44-47,  82. 
Ratification  of.     (See  Ratification.) 
Revocation  of,  79-92.     (See  also  Termination.) 
Termination  of,  24,  33,  79-92.     (See  also  Termination.) 
to  Collect  Rents,  31,  75,  76. 
"    Employ  Other  Brokers,  70-74. 
"    Exchange  Property,  29,  187. 

Forms,  428. 

"    Make  and  Endorse  Negotiable  Paper,  258,  259. 
"        "      Contracts,  36-47,  268-270,  280-286,  360-362. 

"     Loan,  28-30,  201,  202. 
"    Purchase  Property,  29-31. 

"    Receive  Payment  for  Property  Sold,  70,  275-279. 
"   Sell  Property,  27-31. 

Forms,  426-431. 

"    Sign  Contract  for  Sale  of  Property,  26,  27,  36-47,  269-270,  360-362. 
Written,  26-34,  38-42,  44,  46,  71,  201,  202. 
Availability  of  Purchaser,  155-165. 


Bad  Faith  of  Broker,  151,  152,  191,  192,  272,  273.     (See  also  Fraud.) 

of  Principal,  81,  84-87. 
Baltimore,  Application  for  Loan,  Forms,  435,  436. 

Contract  of  Sale,  Forms,  411. 
Bankruptcy  Terminates  Agency,  87,  88. 
Board  of  Brokers,  Rules  of,  235,  236. 

Forms,  380-397. 
Boston,  Contract  of  Sale,  Forms,  410. 

Schedule  of  Fees,  Charges  and  Commissions,  Forms,  393,  394. 


450  GENERAL   INDEX. 

[References  are  to  pages.] 

Broker,  Abandonment  of  Customer  by,  102,  103,  173,  174. 

Abandonment  of  by  Customer,  182,  183. 

Acting  as  Middleman,  19,  20,  36,  51-56,  66,  67. 

"    Principal,  47,  61,  62,  64,  66,  67,  151,  152. 

"     for  Both  Parties,  48-57,  66,  67,  151,   187,  272,  273.      (See  also 
Double  Employment.) 

Acting  for  Purchaser,  125,  126,  151,  152,  220,  221. 

"    Undisclosed  Principal,  70,  151,  152,  269,  270,  286-289. 

Actions  by,  213,  330-340.     (See  also  Pleading.) 
Forms,  440-442,  445. 

Acts  of.     (See  Acts.) 

Advertising  by,  83,  84,  94,  134,  135. 

Affixing  Signs,  289,  290. 

Agreements  with  Principal.     (See  Agreements,  Commission.) 

Application  of  Term,  19,  20. 

as  Purchaser,  65-67. 

Authority  of.     (See  Authority.) 

Bad  Faith  of,  151,  152,  191,  192,  272,  273.     (See  also  Fraud.) 

Bankruptcy  of,  87,  88. 

Combination  by  to  Secure  Secret  Profits,  59,  67,  68. 

Commissions.     (See  Commissions.) 

Compensation.     (See  Commissions.) 

Complaint  of,  for  Recovery  of  Commissions,  331-340.     (See  also  Plead- 
ing.) 

Concealment  of  Facts  by,  258,  293-296. 

Contracts  of.     (See  Contract;   also  Agreements.) 

Corporation  as,  24. 

Corrupt  Influencing  of,  68,  329. 

Death  of,  90. 

Definition  of,  19,  20,  43. 

Double  Employment  of,  48-57,  66,  67,  151,  187,  272,  273.     (See  also 
Double  Employment.) 

Duty  of  to  Principal.     (See  Duty  of  Broker.) 

Effort  Required  of,  130,  131. 

Employees  of,  63. 

Employment  of.     (See  Employment.) 

Exclusive,  100,  101,  251,  252. 
Forms,  426-428. 

Failure  of  Efforts.     (See  Failure.) 

Fraud  of.     (See  Fraud.) 

Function  of,  20. 

General  Rule  as  to  Discretion,  54-56. 

Good  Faith  of,  49,  54-56,  59-68,  150-154,  256-258,  272,  273,  339-340.     (See 
also  Good  Faith.) 

Insurance,  77,  78. 

Introduction  of  Purchaser  by,  94,  95,  133,  134. 


GENERAL   INDEX.  451 

[References  are  to  pages.] 

Broker — Continued. 

Liability  of.     (See  Liability.) 

License  to  Act  as,  24,  25,  78. 

Married  Woman  as,  22,  23. 

May  be  Personally  Interested  with  Consent  of  Principal,  Go,  60. 

Minor  as,  24. 

Misfeasance  of,  277-279. 

Misrepresentations  by,  258,  260-265,  274,  305-309.     (See  also  Fraud.) 

Must  Act  in  Interest  of  Principal,  48,  59-68,  150-153,  256,  257. 

"     be  Procuring  Cause  of  Sale,  114-140.     (See  also  Procuring  Cause.) 

"      Disclose  Relevant  Information  to  Principal,  154,  258. 

"      Not  be  Personally  Interested,  59-68,  151,  152,  272. 

"     Not  Exceed  Authority,  257,  258.     (See  also  Unauthorized  Acts.) 

"     Secure  Best  Offer  Possible,  49,  152,  153. 
Negligence  of,  278,  279. 
Non-Feasance  of,  277-279. 
Notice  to  as  Notice  to  Principal,  270-273. 
Partnership  as,  24,  271, 
Pleading  Acts  Done  by,  340. 
Powers  of.     (See  Authority.) 

Presence  at  Consummation  of  Sale  Not  Necessary,  94,  95,  131,  132. 
Ratification  of  Acts  of.     (See  Ratification.) 
Relations  of  Principal  to,  250-254. 

"    to  Principal,  255-259.     (See  also  Relations.) 
Renting,  75-77. 
Representing  Purchaser,  125,  126,  151-152,  220,  221.     (See  also  Double 

Employment.) 

Revocation  of  Authority,  79-92.     (See  also  Termination.) 
Secret  Profits  of,  59-68,  151,  152,  272. 
Signature  to  Contract,  46,  47,  360-362. 
Silence  of  Not  Usually  Fraudulent,  293-296. 
Termination  of  Agency,  24,  33,  76,  79-92.     (See  also  Termination.) 

by,  33,  80,  84. 

Unauthorized  Acts  of,  37,  45,  106-113,  267,  268,  282-280. 
Unlawful  Agreements  of,  329. 

Intrusion  on  Heal  Property  by,  289,  290. 
Usury  of,  274. 
Volunteer,  105-113,  231,  232. 
Who  May  Act  as,  22-25. 
With  Discretion,  52-56,  66,  67,  151,  187. 
Without  Discretion,  51-56,  66,  67. 

Brooklyn,  Schedule  of  Fees,  Charges,  and  Commissions,  Forms,  381,  382. 
Burden  of  Proof  as  to  Broker's  Good  Faith,  68. 

as  to  Principal's  Knowledge  of  Double  Employment,  51. 
"    "    Purchaser's  Fnancial  Ability,  164,  165. 


452  GENERAL   INDEX. 

[References  are  to  pages.] 


California,  Broker's, Authority  to  Purchase  and  Sell,  29. 

Broker's  Authority  to  Sign  Contract  of  Sale,  41. 
Cancellation  of  Contracts,  46. 
Caution,  Degree  Required  of  Vendee,  313-316. 
Change  of  Mind  by  Vendor,  129,  159,  168-170,  244,  246-248,  254. 
Change  of  Terms,  95,  142-147,  157,  168,  169,  171. 
Acceptance  by  Owner  of,  95,  144,  145. 
after  Acceptance  by  Purchaser,  142,  143. 
Charges,  Schedules  of,  Forms,  380-397. 
Chicago,  Agent's  Contract  of  Sale,  Forms,  414. 
Application  for  Loan,  Forms,  432,  433. 
Contract  of  Exchange,  Forms,  421-423. 
"    Sale,  Forms,  404-408,  414. 
Exclusive  Agency  Contract,  Forms,  427,  428. 
Schedule  of  Fees,  Charges  and  Commissions,  Forms,  382-386. 
Claims  for  Commissions,  Double,  95-101,  341-352.     (See  also  Interpleader.) 
Closing  of  Title,  376. 
Collection  of  Rents,  31,  75,  76. 
Combination  for  Secret  Profits,  59,  67,  68. 
Commissions,  93-249.     (See  also  subheads.) 
Agreements  for.     (See  Agreements.) 
All  in  Excess  of  Fixed  Price,  63,  154,  224-228,  245-246. 
Alternative  Contracts  of  Sale  do  Not  Defeat,  171-173. 
Amount  of,  63,  154,  204,  207-209,  222-237,  245,  246.     (See  also  Amount.) 
as  Affected  by  Abandonment  by  Broker,  102,  103,  173,  174. 

"    Broker's  Bad  Faith,  151,  152,  191,  192,  272,  273. 
"        "  "   Custom,  74,  228-237. 

"    Defective  Title,  177-179,  182,  184,  188-192,  194-201,  244. 

246-248. 
"        "          "   Failure  of  Broker's  Efforts,  85,  102,  103,  127-129,   135, 

173,  174,  252-254. 
"          "    Fraud  of  Principal,  213. 

"        "          "   Misrepresentations  by  Vendor,  183,  184,  201. 
"        "          "    Provisional  Contract  of  Sale,  158,  173. 

"    Promises  to  Pay,  51,  52,  54,  126,  127,  213,  214,  219,  220. 
"          "    Rules  of  Real  Estate  Boards,  235,  236. 

"   Special  Agreement.     (See  Special  Agreements.) 
Complaint  for  Recovery  of,  331-340.     (See  also  Pleading.) 

Forms,  440-442,  445. 

Completed  Transaction  Necessary,  117-125,  166-174. 
Conveyance  of  Property  Not  Necessary  for,  170. 
Deferred,  241-248. 
Division  of,  59,  60,  70-74,  230. 


GENERAL   INDEX.  453 

[References  are  to  pages.] 

Commissions — Continued. 

Double  Claims  for,  95-101,  341-352.     (See  also  Interpleader.) 

Due,  Time  When,  238-249. 

as  Affected  by  Agreements  to  Defer,  241-248. 

"   Wait  until  Title  is  Closed,  245-247. 
"    Contingent  Commission  Agreements,  243-245. 
"    Defective  Title,  247,  248. 
"    Unsupported  Agreements  Deferring  Commissions,  241- 

243. 

"   Valid  Agreements  Deferring  Commissions,  243. 
Earned, 

Presence  of  Broker  Not  Necessary  for,  131,  132. 
Production  of  Purchaser  Sufficient  for,  115-122,  141,  142. 
Requirements  of,  94-104,  117-125,  130-134,  166-174,  240-242. 
Contract  of  Sale  Necessary,  115,  117-125,  166,  170,  171. 
Contract  of  Sale  Not  Necessary,  166,  170. 
Delivery  of  Deed  Required,  119. 

When,  87,  94,  95,  114-140,  186,  193-203,  205-211,  238-249. 
for  Unsuccessful  Efforts,  127-129. 
in  Absence  of  Agreement,  228-237. 

Introduction  of  Purchaser  Not  Necessary  for,  94,  95,  133,  134. 
Liability  for.     (See  Liability.) 
Measure  of,  223,  224. 
Methods  of  Earning,  114,  115. 
Not  Defeated  by  Change  of  Terms,  95,  142-147,  157,  168,  169,  171. 

"     Failure  of  Purchaser,  120,  181-184. 
"  "    Failure  of  Principal.     (See  Failure.) 

"  "          "    Failure  of  Tenant,  208-211. 

"     Interference  of  Principal,  135,  139,  227,  228,  251-253. 
"    WTife's  Refusal  to  Sign  Deed,  118,  177. 

Not  Earned  if  Broker  is  Not  Procuring  Cause.     (See  Procuring  Cause.) 
on  Exchanges  of  Property,  50,  51,  59,  60,  185-192,  228,  229.     (See  also 

Exchange.) 

"     Installment  Sales,  248,  249. 
"    Leases,  205-211,  230,  236.     (See  also  Leases.) 
"    Loans,  193-204.     (See  also  Loans.) 
"    Options,  158,  159. 
"    Rentals,  75,  76. 

"     Sales  Affected  by  Advertising,  83,  84,  134,  135. 
Payment  of.     (See  Payment.) 
Purchaser's  Responsibility  for,  183,  218-221. 
Recovery  of.     (See  Recovery;  also  Pleading.) 
Rule  as  to.     (See  Rule.) 

Sale  must  be  on  Employer's  Terms,  141-147,  156-158,  167-169,  202,  203. 
Schedules  of,  Forms,  380-397. 
Sharing,  59,  CO,  70-74,  230. 


454  GENERAL   INDEX. 

[References  are  to  pages.] 

Commissions — Continued. 
Subagents',  70-74. 
Volunteers',  105-107,  231,  232. 
Waiver  of  by  Broker,  168,  224. 
When  Agent  is  Not  a  Broker,  231,  232. 

"      Broker  Acts  for  Both  Parties,  50-57,  66,  67,  151,  187,  272,  273. 
"      Principal  is  Undisclosed,  151,  152. 
"      Sale  is  Consummated  by  Another  Broker,  135-137. 
"         "      "  "  "     Principal,  100-102,  137-140,  251-254. 

"      Several  Brokers  are  Employed,  95-101,  135-137. 
Compensation.    (See  Commissions.) 
Agreed,  223-228. 
Amount  of.     (See  Amount.) 
Complaint  for  Recovery  of  Commissions,  331-340.     (See  also  Pleading.) 

Forms,  440-442,  445. 
after  Interpleader,  Forms,  445. 

Completed  Transaction,  Necessary  to  Commissions,  117-125,  166-174. 
Completeness  of  Transaction,  as  Affected  by  Change  of  Terms,  168,  169, 

171. 

as  Affected  by  Special  Conditions,  168-170. 
Concealment,  by  Broker,  258,  293-296. 
by  Principal,  293-298. 
"    Purchaser,  296-298. 
Conspiracy,  67,  68,  325,  328,  329. 
Proof  of,  325. 
Punishment  of,  328,  329. 
Consummation  of  Sale  by  Another  Broker,  86,  135-137. 

by  Principal,  100-102,  137-140,  251-254. 
Contingent  Commission  Agreements,  243-245. 
Contract.     (See  also  Agreements.) 

Action  Based  Upon,  334-340.     (See  also  Pleading.) 
Cancellation  of,  46. 
Commission.     (See  Agreements.) 
Compelling  Execution  of,  327,  328. 
Encroachment,  369,  370. 

Forms,  436-439. 

Executed  for  Undisclosed  Principal,  47,  287-289. 
Liability  of  Agent  for  Improper,  280-282,  329. 
"  "        "        "     Unauthorized,  281-286. 

"  "   Principal  for  Agent's,  46,  47,  268-270. 

of  Corporation,  47,  360-362. 
"   Employment,  26-34,  39-42,  49,  50,  73,  74,  223-228,  243-245. 

Forms,  426-431. 

Double  Employment  a  Breach  of,  49,  50. 
"  Married  Woman,  22,  23. 
"   Salesman,  Forms,  429-431. 


GENERAL   INDEX.  455 

[References  are  to  pages.] 

Contract— Continued. 

Unauthorized,  281-286. 
Under  Seal,  40,  46,  47,  269,  270,  334. 
Contracts  for  Exchange  of  Property,  170,  171,  187-192. 

Forms,  419-423. 
Contracts  for  Sale  of  Property,  353-379.     (See  also  subheads.) 

Forms,  398-425. 
Acknowledgment  of,  362. 

Forms,  403,  412. 
Agent's  Sale,  Forms,  414. 
Alternative,  171-173. 
Approval  Clause  in,  377,  378. 
as  Affected  by  Statute  of  Frauds,  38,  39,  356,  357. 
Assignment  of,  Forms,  418,  419,  424,  425. 
Covenants  and  Restrictions  in,  368-370. 
Demand  for  Performance  of,  Forms,  425. 
Description  of  Property  in,  364-366. 
Drafting,  355,  356. 
Enforcement  of,  46,  47. 
Essential  Features  of,  358,  359. 
Execution  of,  46,  47,  280-289,  360-362. 
General  Provisions  in,  378,  379. 
Informal,  356,  357. 

Deposit  to  Bind,  356,  357. 
Installment  Plan,  Forms,  415-418. 
Leased  Property,  370,  371. 
Liability  Under  in  Case  of  Fraud,  322,  323. 
Made  by  Broker,  36-47,  268-270,  280-286,  360-362. 

Cancellation  or  Surrender  of,  46. 

Enforcement  of,  46,  47. 

in  Broker's  Own  Name,  47. 

Ratification  of,  45,  319,  320. 

Signature  to,  46,  47.     (See  also  Signing.) 

Necessary  to  Entitle  Broker  to  Commissions,  115,  117-125,  166,  170,  171. 
Not  Necessary  to  Entitle  Broker  to  Commissions,  166,  170. 
Oral,  34,  35,  356,  357. 

"     Understandings  as  to,  363,  364. 
Parties  to,  359,  360. 
Power  to  Make, 

of  Administrator,  360,  361. 

"   Alien,  360. 

"   Broker,  36-47,  268-270,  360-362. 

"    Business  Corporation,  47,  360-362. 

"   Executor,  360,  361. 

"    Guardian,  360,  361. 

"    Party  Not  an  Owner,  215,  216,  360. 


456  GENERAL   INDEX. 

[References  are  to  pages.] 

Contracts  for  Sale  of  Property — Continued. 
Power  to  Make,  Trustee's,  360,  361. 
Provisional,  158,  173. 

Recitals  in  Not  Waiver  of  Fraud,  320,  321. 
Rescission  of,  311,  318-326. 

Restricted  Lots,  Installment  Plan,  Forms,  415,  416. 
Signatures  to,  46,  47,  360-362.     (See  also  Signing.) 
Special  Clauses  in,  366,  377,  378. 
Statement  in  as  to  Easements,  365,  368-370. 
"    "    "    Encroachments,  368-370. 
"    "   "    Fixtures,  376,  377. 
"    "    "    Gross  or  Acreage  Price,  368. 
"  "    "    "    Incumbrances,  365,  368-370. 

"    "    "    Manner  of  Payment,  371-373. 
"    "    "    Mortgages,  371-373. 
"    "    "   New  Buildings,  375. 

"  "    "    "    Ownership  in  Adjacent  Streets,  366-368. 

"    "    "    Price,  371-373. 
"    "    "    Restrictions,  368,  369. 

"  "    "    "    Time  for  Delivery  of  Deed,  375,  376. 

Suburban  Property,  373-375. 
Unauthorized,  280-286. 
under  Seal,  40,  46,  47,  269,  270. 
Vitiated  by  Material  Fraud,  292. 
Conversion  of  Money  by  Broker,  259. 

Conveyance  of  Property  Not  Necessary  for  Commissions,  170. 
Cook  County,  Illinois,  Agent's  Sale  Contract,  Forms,  414. 
Contract  of  Sale,  Forms,  400-403,  414. 
Exclusive  Agency  Contract,  Forms,  427,  428. 
Schedule  of  Fees,  Charges  and  Commissions,  Forms,  387-391. 
Corporation  as  Broker,  24. 

Power  to  Make  Contract  of  Sale,  360. 
Signature  to  Contract  of  Sale,  47,  361,  362. 
Covenants  and  Restrictions  in  Contract  of  Sale,  368-370. 
Criminal  Fraud,  327-329. 

Compelling  Execution  of  Instrument,  327,  328. 
Conspiracy,  67,  68,  325,  328,  329. 
Corrupt  Influencing  of  Agent,  68,  329. 
Extortion,  328. 

Obtaining  Property  by  False  Pretenses,  327. 
Punishment  for,  328,  329. 
Unlawful  Agreements  of  Agents,  329. 
Custom,  as  Affecting  Commissions,  74,  228-237. 
Absence  of,  236,  237. 

as  Affected  by  Rules  of  Real  Estate  Boards,  235,  236. 
"    Part  of  Agreement,  229,  230. 


GENERAL   INDEX.  457 

[References  are  to  pages.] 


Custom — Continued. 

Binding  upon  Parties,  230-232. 

Evidence  of,  75,  231,  233-235. 

for  Division  of  Commissions,  230. 

How  Established,  230,  232,  233. 

Ignorance  of,  232,  233. 
Customer.     (See  Purchaser.) 


Damages,  Liquidated,  171-173. 

Measure  of  in  Case  of  Fraud,  321. 
Death  of  Broker,  90. 

of  Principal,  7G,  90,  91. 
Deed,  Delivery  of,  119,  375,  370. 
Deed  and  Money,  Forms,  423,  424. 

Defective  Title,  177-179,  182,  184,  188-192,  194-201,  244,  246-248. 
Defense  in  Pleading,  Matters  of,  56,  57,  174,  339,  340. 
Deferred  Commissions,  241-248. 
Delivery  of  Deed,  119,  375,  376. 

Demand  for  Performance  of  Contract  of  Sale,  Forms,  425. 
Denver,  Schedule  of  Fees,  Charges  and  Commissions,  Forms,  397. 
Deposit  to  Bind  Informal  Contract,  356,  357. 
Description  of  Property  in  Contract  of  Sale,  364-366. 
Destruction  of  Property  Terminates  Agency,  87. 
Disclosure  of  Information,  154,  258,  295,  296. 

of  Purchaser  to  Principal,  159-161. 
Waiver  of  Right  to,  160,  161. 
Discretion,  Broker  With,  52-56,  66,  67,  151,  187. 

Broker  Without,  51-56,  66,  67. 

General  Rule  as  to,  54-56. 
Dispossession  of  Tenant,  76,  77,  211. 
Division  of  Commissions,  59,  60,  70-74,  230. 

Double  Claims  for  Commissions,  95-101,  341-352.     (See  also  Interpleader.) 
Double  Employment,  48-57,  66,  67,  151,  187,  272,  273. 

Broker  with  No  Discretion  May  Act  for  Both  Parties,  51-56. 

General  Rule  as  to  Discretion,  54-56,  151. 

in  Exchanges  of  Property,  50,  51,  66,  67,  187. 

Not  Unlawful  in  Itself,  52-56. 

Pleading,  as  a  Defense,  56,  57. 

Ratification  of,  51,  52. 

With  Knowledge  of  Principals,  51,  52,  273. 

Without  Knowledge  of  Principals,  49-51. 
Drafting  Contract  of  Sale,  355-379. 
Due,  When  Commissions  Are,  238-249.     (See  also  Commissions.) 


458  GENERAL    INDEX. 

[References  are  to  pages.] 

Duration  of  Broker's  Authority,  31-35,  80-92,  147,  148. 
Duty  of  Broker  to  Principal,  38,  48-50,  55,  59,  60,  75,  115-117,  130,  131,  175- 
177,  255-258. 

E 

Earned  Commissions.     (See  Commissions.) 

Easements,  365.  368-370. 

Employees  of  Broker,  63. 

Employer.    (See  Principal;  also  Purchaser.) 

Employment  of  Broker,  36-57,  66,  67,  105-113,  186,  201,  202,  207,  213,  214, 

220,  221.  (  See  also  subheads.) 
by  a  Broker,  70-74. 

"   Purchaser,  125,  126,  151,  152,  220,  221. 
Contract  of,  26-34,  39-42,  49,  50,  73,  74,  223-228,  243-245. 

Forms,  426-431. 

Double,  48-57,  66,  67,  151,  187,  272,  273.    (See  also  Double  Employment.) 
Implied,  111-112. 
Manner  of,  108. 

Must  be  by  Owner  or  His  Authorized  Agent,  108,  109. 
of  More  than  One,  95-101,  135-137,  250,  251,  341-344. 
Powers  Conferred  by,  36-38,  43-45,  70,  115-117. 
Ratification  Equivalent  to,  109-113. 

Termination  of,  24,  33,  76,  79-92.     (See  also  Termination.) 
Time  of,  31-35,  80-84,  147,  148. 
Encroachments,  368-370. 

Agreements  for,  369,  370. 

Forms,  436-439. 
Enforcement  of  Commission  Contract,  50. 

of  Contract  of  Sale  Made  by  Broker,  46,  47. 
Equity  Suits,  Interpleader  Makes  Actions  at  Law,  351,  352. 
Essential  Features  of  Contract  of  Sale,  358,  359. 
Evidence,     (See  Proof.) 

Exchange  of  Property,  185-192.     (See  also  subheads.) 
Authority  of  Broker  to  Effect,  29,  187. 

Forms,  428. 

Commissions  on,  50,  51,  59,  60,  185-192,  228,  229. 
as  Affected  by  Broker's  Bad  Faith,  191,  19.2. 
"         "          "    Defective  Title,  188-192. 
Conflicting  Decisions  as  to  when  earned,  185,  186. 
from  Both  Parties,  187. 

Rule  when  Contract  has  been  Executed,  187-192. 
When  Earned,  186. 
Contracts  for,  170,  171,  187-192. 

Forms,  419-423. 

Defeated  by  Defective  Title,  192. 
Double  Employment  in,  50,  51,  06,  67,  187. 


GENERAL   INDEX.  459 

[References  arc  to  pages.] 


Exclusive  Agency,  100,  101,  251,  252. 

Forms,  426-428. 
Execution  of  Contract  by  Broker,  47,  280-289. 

of  Contract  of  Sale,  46,  47,  280-289,  360-362. 
Executor,  Liability  of  for  Commissions,  217,  218. 

Power  of  to  Make  Contract  of  Sale,  360,  361. 

Signature  of  to  Contract  of  Sale,  360,  361. 
Exercise  of  Caution  Required  of  Vendee,  311-316. 
Extent  of  Broker's  Ordinary  Authority,  36-45,  75-78. 
Extortion,  328. 


Facts  Constituting  Cause  of  Action,  Pleading,  333-337. 
Failure  of  Broker's  Efforts,  75,  81,  85,  102,  103,  127-129,  135,  173,  174,  252- 
254. 

Caused  by  Principal's  Interference,  135. 
Liability  for,  75,  148,  149. 

Eights  of  Principal  after,  102,  103,  135,  173,  174,  252-254. 
of  Customer  to  Complete  Sale,  120,  135,  181-184. 

Caused  by  Customer's  Abandonment  of  Broker,  135,  182,  183. 

"        "   Misrepresentations  of  Vendor,  183,  184. 
General  Rule  as  to,  181,  182. 
of  Lease,  208-211. 

"    Principal  to  Complete  Loan,  194-201,  203,  204. 
"    Principal  to  Complete  Sale,  103,  117,  120,  126,  129,  159,  167-170,  175- 

180,  182-184,  188-192,  244,  246-248,  254. 

Caused  by  Defective  Title,  177-179,  182,  188-192,  244,  246-248,  254. 
"    Refusal  of  Vendor,  120,  126,  159,  167-170,  254. 

"    Vendor's  Wife,  118,  177. 
General  Rule  as  to,  176,  177. 
Special  Causes  for,  179,  180. 
False  Pretenses,  Obtaining  Property  by,  327. 

False  Representations,  258,  260-265,  274,  296-317.  (See  also  Misrepresenta- 
tions;  also  Fraud.) 
Fees.     (See  Commissions.) 

Schedules  of,  Forms,  380-397. 
Financial  Ability  of  Purchaser,  161-165. 
Burden  of  Proof  as  to,  164,  165. 
Need  Not  be  Shown,  162,  163. 
First  Mortgages,  372,  373. 

Fixed  Price,  All  in  Excess  of,  154,  224-228,  245,  246. 
Fixtures,  376,  377. 
Forfeit  Money,  245. 
Fraud,  291-329.     (See  also  subheads.) 

Acts  Not  Usually  Considered  a,  291-304. 

Assertions  and  Opinions  as  to  Value,  300,  301. 


460  GENERAL   INDEX. 

[References  are  to  pages.] 

Fraud — Continued. 

Acts  Not  Usually  Considered  a, — Continued. 

Promises,  Hopes,  etc.,  298,  299. 

Silence  and  Concealment,  293-298. 
Assertions  and  Opinions  as  to  Value,  301-304. 
Contract  of  Sale  Vitiated  by  Material,  292. 
Criminal,  67,  68,  325,  327-329.     (See  also  Criminal  Fraud.) 
False  Representations,  258,  260-265,  274,  296-298,  301-317. 
Liability  on  Contract  in  Case  of,  322,  323. 
Negligence  of  Vendee  No  Bar  to  Relief,  316,  317. 

of  Broker,  50,  51,  59,  60,  64,  67,  68,  91,  258,  260-265,  273,  292,  293,  305- 
309,  318-321. 

Concealment  of  Material  Facts  from  Principal,  258. 

Double  Employment  Without  Knowledge  of  Principals,  50,  51. 

Pleading,  265. 

Termination  of  Agency  by,  91. 

Waiver  of,  318-321. 
of  Principal,  213,  260,  314,  316,  317. 
"    Vendee,  296-298. 
Pleading,  265,  324-326. 
Proof  of,  325,  326. 
Remedies  for,  321-326. 
Rescission  in  Case  of,  318-326. 

Statute  of,  26,  31-35,  38,  39,  45,  356,  357.  (See  also  Statute  of  Frauds.) 
What  Constitutes,  291,  292. 
When  Concealment  is  a,  296-298. 
Functions  of  Broker,  20. 


Good  Faith  of  Broker,  49,  54-56,  59-68,  91,  150-154,  256-258,  272,  273,  339, 
340. 

Broker  Not  Required  to  Establish,  151,  339,  340. 
Double  Employment  Not,  55,  56,  151. 
Requirements  of,  54-56,  59-68,  150-154,  256-258,  272,  273. 
Revocation  of  Agency  Must  be  in,  81,  84-87. 
Gross  or  Acreage  Price  of  Property,  368. 
Guardian,  Liability  for  Commissions,  217,  218. 
Power  to  Make  Contract  of  Sale,  360,  361. 
Signature  to  Contract  of  Sale,  360,  361. 

H 

Hopes,  Expression  of,  298,  299. 

I 

Ignorance  of  Custom,  232,  233. 

Illinois,  Authority  of  Broker  to  Sign  Contract  of  Sale,  41,  42. 


GENERAL   INDEX.  461 

[References  are  to  pages.] 

Improper  Contracts,  Broker's  Liability  for,  280-282,  329. 
Improvements,  75. 

Misrepresentations  as  to,  308. 
Incidental  Power  to  Contract,  Broker's,  44,  45. 
Increase  of  Price  of  Property,  146,  147. 
Incumbrances,  365,  368-370. 
Information,  Disclosure  of  by  Broker,  154,  258,  293-296. 

Vendor's  Duty  to  Give,  311,  312. 
Insanity  Terminates  Agency,  88-90. 
Installment  Sales,  Commissions  on,  248,  249. 

Contracts  for,  Forms,  415-418. 

Instructions  to  Sell  Property,  Power  Conferred  by,  37,  115-117,  187. 
Insurance  Brokers,  77,  78. 
Interference  of  Principal  in  Broker's  Negotiations,  135,  139,  227,  228,  251- 

253. 

Interpleader,  341-352.     (See  also  Pleading.) 
Forms,  442-445. 

Complaint  after,  Forms,  445. 

Method  of  Procedure,  348-351. 

Nature  of,  344. 

Requisites  of,  351,  352. 

When  Permissible,  345-348. 
Intervention  of  Principal.     (See  Interference.) 
Introductions,  94,  95,  133,  134. 
Intrusion  on  Real  Property,  289,  290. 

J 

Jersey  City,  Schedule  of  Fees,  Charges  and  Commissions,  Forms,  395,  396. 
Joint  Interest  in  Property,  213. 

Severance  of  Revokes  Agency,  87. 

K 
Knowledge,  Principal  Chargeable  with  Broker's,  270-273. 


Law  Day,  The,  376. 

Law,  Proof  of  Fraud  at,  325,  326. 

Leases,  125,  370,  371. 

Commissions  on,  205-211,  230,  236. 

Amount  of,  207-209. 

as  Affected  by  Dispossession  of  Tenant,  211. 

«         "          "    Failure  of  Lease,  208-211. 

General  Requirements  for  Recovery  of,  206,  207. 

Tenant's  Liability  for,  207. 

When  Earned,  205-211. 


462  GENERAL   INDEX. 

[References  are  to  pages.] 

Legal  Effect,  Pleading,  332,  333. 

Liability  of  Broker,  260-265,  275-290.     (See  also  subheads.) 
for  Affixing  Signs,  289,  290. 
"   Contracts  Executed  by  Him,  37,  280-289. 
"   Conversion  of  Money,  259. 
"    Defective  Title,  177-179. 
"    Exceeding  Authority,  257,  258,  282-286. 
"   Failure  to  Bent,  75. 

"   Sell,  148,  149. 
"    Fraud,  68,  260-263. 
"    Improper  Contracts,  280-282,  329. 
"   Misfeasance  and  Non-feasance,  277-279. 
"    Misrepresentations,  260-265. 
"    Moneys  Received,  275-277. 
"   Negligence,  278,  279. 
"    Secret  Profits,  68. 
"   Unauthorized  Acts,  106-113,  282-286. 
"  "  Contracts,  281-286. 

"   Unlawful  Intrusion  on  Property,  289,  290. 
to  Third  Parties,  275-290. 
When  Principal  is  Incapable,  281. 

"  Non-existent,  280,  281. 
"  "          "  Undisclosed,  286-289. 

Liability  of  Joint  Employers  for  Commissions,  213. 
of  Persons  Sharing  Profits,  68. 

of  Principal,  212-221,  260-265.     (See  also  subheads.) 
Acceptance  of  Proceeds  Test  of,  262-265,  267. 
for  Agent's  Contracts,  46,  47,  268-270. 
"    Broker's  Representations,  261-265,  274,  305,  306. 

Wrongdoing,  267. 

for  Commissions,  81,  95-102,  183,  212-221. 
as  Affected  by  Fraud,  213. 
"          "         "    Promises  to  Pay,  213,  214. 
to  Exclusive  Agent,  101. 
When  Negotiating  Sale,  101,  102. 
When  Not  Owner  of  Property,  214-218. 
for  Misrepresentations,  260. 

"   Notice  to  Agent,  270-273. 
to  Third  Parties,  266-274. 
When  Undisclosed,  47,  269,  270. 
of  Purchaser  for  Commissions,  183,  218-221. 
"    Tenant  for  Commissions,  207. 

"   Trustees,  Executors  and  Administrators  for  Commissions,  217,  218. 
on  Contract  in  Case  of  Fraud,  322,  323. 
License  to  Act  as  Broker,  24,  25,  78. 
Liquidated  Damages,  171-173. 


GENERAL   INDEX.  463 

[References  are  to  pages.] 

Loans,  28-30,  125,  19.VJ04. 

Authority  to  Negotiate,  28-30,  201,  202. 
Application  for.  i^s. 
Forms.  4:51-430. 
Commissions  on,  193-204. 

a-  AtlVctcd  l.y  Defective  Title,  194-201. 

"     Failure  of  Principal,  194-201,  203,  204. 
"     Misrepresentations  of  Principal,  201'. 
"     Refusal  of  Principal,  203,  204. 
"    Special  Conditions,  200,  201. 
Kmployment  Requisite  to,  201,  202. 

Xot  Earned  unless  Principal's  Terms  are  Met,  202,  203. 
Recovery  of,  203,  204. 
When  Earned,  193-203. 
New  York  Rule,  194-19G. 
Rule  in  Other  States,  196-200. 
Location  of  Property,  Misrepresentations  as  to,  308. 
Lots,  Restricted,  368,  369. 
Forms,  415,  416. 


Manner  of  Payment  for  Property,  371-373. 

Maps  of  Suburban  Property,  373-375. 

Married  Women  as  Brokers,  22,  23. 

Massachusetts,  Broker's  Authority  to  Sign  Contract  of  Sale,  41. 

Measure  of  Broker's  Compensation,  223,  224. 

Methods  of  Closing  Sale,  354-356. 

of  Describing  Property,  364-366. 
"  Earning  Commissions,  114,  115. 
"  Pleading,  332. 

Middleman,  Broker  as,  19,  20,  36,  51,  56,  66,  67. 
Minnesota,  Broker's  Authority  to  Sign  Contract  of  Sale,  42. 
Minors  as  Brokers,  24. 
Misfeasance,  Agent's  Liability  for,  277-279. 
Misrepresentations,  258,  260-265,  274,  296-298,  301-317. 

by  Broker,  258,  260-265,  274,  305-309. 

Liability  of  Principal  for,  261-265,  274,  305,  306. 

by  Principal,  183,  184,  201,  260,  313-316. 

"    Vendee,  296-298. 
Missouri,  Broker's  Authority  to  Make  Loans,  30. 

"     Sell,  29,  30. 
Money,  Conversion  of  by  Broker,  259. 

Deed  and,  Forms,  423,  424. 

Forfeit,  245. 

Received,  Liability  of  Broker  for,  275-277. 
Montana,  Broker's  Authority  to  Purchase  or  Sell,  31. 


464  GENEBAL   INDEX. 

[References  are  to  pages.] 

Mortgages,  371-373. 

First,  372,  373. 

Misrepresentations  as  to,  308. 

Purchase  Money,  372,  373. 

Second,  372,  373. 
Motion  for  Interpleader,  Forms,  442-444. 

N 

Nebraska,  Broker's  Authority  to  Sell,  30,  31. 
Negative  Easements,  368-370. 
Negligence,  Broker's  Liability  for,  278,  279. 
of  Vendee,  310-317. 

No  Bar  to  Relief  against  Wilful  Fraud,  316,  317. 
Omission  of  Due  Caution,  312-316. 

"          "    Investigation,  312. 
Reliance  upon  Statement  of  Vendor,  310,  311. 
Negotiable  Paper,  Broker's  Power  as  to,  258,  259. 
Net  Price  of  Property,  63,  224-228,  245,  246. 

New  Jersey,  Broker's  Authority  to  Negotiate  Sale  or  Exchange,  29. 
Broker's  Authority  to  Sign  Contract  of  Sale,  40,  41. 
Contract  of  Sale,  Forms,  412,  413. 
New  York,  Broker's  Authority  to  Make  Loan,  28,  29. 
Broker's  Authority  to  Sell,  27,  28. 

"  "  "    Sign  Contract  of  Sale,  39,  40. 

Rule  as  to  Commissions  on  Loans,  194-196. 
Statute  of  Frauds,  33-35. 

New  York  City,  Application  for  Loan,  Forms,  431,  432. 
Contract  of  Exchange,  Forms,  419,  420. 

"  "    Sale,  Forms,  398-400. 

Schedule  of  Fees,  Charges  and  Commissions,  Forms,  380,  381. 
Non-feasance,  Broker's  Liability  for,  277-279. 
Non-Performance,  Pleading  Excuse  for,  337,  338. 
North  Dakota,  Broker's  Authority  to  Sign  Contract  of  Sale,  42. 
Notice  to  Agent,  270-273. 

of  Death  of  Principal  Not  Necessary,  90. 
of  Revocation,  92. 

When  Notice  to  Principal,  270,  271,  273. 
"  Not  Notice  to  Principal,  271-273. 
"  Principal  is  Chargeable  with  Agent's  Knowledge,  270-273. 


Obligations  of  Broker  to  Principal.     (See  Duty  of  Broker.) 
Opinions  as  to  Value,  When  Fraudulent,  301-304. 
When  Not  Fraudulent,  300-301. 


GENERAL   INDEX.  465 

[References  are  to  pages.] 

Oral  Agreements,  34,  35,  47,  356,  357,  363,  364. 

Authorization  of  Broker,  26-35,  39-42,  44-47,  82. 
Option,  86,  171-173,  214,  215,  357,  358. 

Not  a  Previous  Sale,  86. 

Not  a  Sale,  158,  171,  172. 

Without  Consideration,  358. 
Order  of  Interpleader,  Forms,  444,  445. 
Owner.     (See  Principal.) 
Ownership  in  Streets  Adjacent  to  Property,  366-368. 

P 

Parties  to  Contract  of  Sale,  359,  300. 
Partnership  as  Brokers,  24,  271. 
Party  Walls,  3(>r>. 
Payment  for  Property,  371-373. 

Agent's  Power  to  Receive,  70,  275-277. 
by  Installment,  Forms,  415-418. 
to  Agent  as  Payment  to  Principal,  276,  277. 
of  Commissions, 

by  Purchaser,  218-221. 
on  Installment  Sales,  248,  249. 

Promises  for,  51,  52,  54,  126,  127,  213,  214,  219,  220. 
Performance  of  Contract  of  Sale,  Demand  for,  Forms,  425. 
Pleading  Full,  337,  338. 
Terminates  Agency,  79,  80. 
Time  of,  31-35,  80-84,  147,  148. 
Philadelphia,  Contract  of  Sale,  Forms,  408,  409. 

Schedule  of  Fees,  Charges  and  Commissions,  Forma,  392. 
Pleading,  330-352.     (See  also  Interpleader.) 

Forms,  440-445. 

Action  Based  upon  a  Contract,  334-340. 
Acts  Done  by  Agent,  340. 
Authority  of  Broker,  336,  377. 
Change  of  after  Litigation  is  Begun,  180. 
Complaint  after  Interpleader,  Forms,  445. 
"  for  Broker's  Commissions,  331-340. 

Forms,  440-442,  445. 
Double  Employment,  56,  57. 
Facts  Constituting  Cause  of  Action,  333-337. 

"      to  be  Stated,  335-337. 
Fraud  of  Agent,  265,  324-326. 

When  Committed  by  More  than  One,  324,  325. 
Full  Performance  and  Excuse  for  Non-Performance,  337,  338. 
Legal  Effect,  332,  333. 
Matters  of  Defense,  56,  57,  174,  339,  340. 
Methods  of,  332. 
Special  Agreements,  338,  339. 


466  GENERAL   INDEX. 

[References  are  to  pages.] 

Powers,  Authority  and  Rights  of  Broker.     (See  Authority.) 
Presence  of  Broker  at  Consummation  of  Sale,  94,  95,  131,  132. 
Previous  Sale,  Option  Not  a,  86. 

Termination  of  Agency  by,  8G,  87. 
Price  of  Property,  368,  371-373.     (See  also  subheads.) 

Agent  Must  Secure  Best  Possible,  49,  152,  153. 

All  in  Excess  of  Fixed,  63,  154,  224-228,  245,  246. 

Gross  or  Acreage,  368. 

Increase  of,  146,  147. 

Net,  63,  224-228. 

Paid,  Misrepresentations  as  to,  305,  300. 

Requirements  as  to,  145-147. 
Procuring  Cause  of  Sale,  Broker  as,  114-140.     (See  also  subheads.) 

Contract  of  Sale  Necessary,  115,  117-125,  166,  170,  171. 
"         "     "      Not  Necessary,  166,  170. 

Degree  of  Effort  Required  of  Broker,  130,  131. 

Delivery  of  Deed  Requisite,  119. 

Effect  of  Change  of  Terms,  142-145. 

"        "    Promises  to  Pay  Commissions,  126,  127. 
"        "    Special  Agreements,   118,  121-124. 

General  Rule  as  to,  124,  125,  238-240. 

Good  Faith  of  Broker  Necessary,  150-153. 

Introduction  of  Purchaser  Not  Necessary,  94,  95,  133,  134. 

Presence  of  Broker  at  Sale  Not  Necessary,  131,  132. 

Production  of  Purchaser  Sufficient,  115-122,  141,  142. 

Sale  Must  be  on  Employer's  Terms,  141-147. 

When  Broker  Represents  Purchaser,  125,  126. 

Sale  is  Made  by  Principal,  100-102,  137-140.  2.->l-2.->4. 
Profits,  Secret,  58-68,  151,  152,  272.        (See  also  Secret  Profits.) 
Promises,  Hopes,  etc.,  298,  299. 
Promises  to  Pay  Commissions,  51,  52,  54,  126,  127,  213,  214,  219,  220. 

Effect  of,  51,  52,  126,  127,  213,  214. 

Purchaser's,  219,  220. 
Proof  of  Conspiracy,  325. 

of  Custom,  75,  231,  233-235. 
"    Financial  Ability  of  Purchaser,  164,  165. 
"   Fraud,  325,  326. 
Property, 

Contracts  for  Sale  of.     (See  Contracts.) 

Conveyance  of  not  Necessary  for  Commission,  170. 

Description  of  in  Contract  of  Sale,  364-366. 

Destruction  of  Terminates  Agency,  87. 

Easements  on,  365,  368-370. 

Encroachments  on,  368-370. 

Exchange  of.     (See  Exchange.) 

Fixtures  on,  376,  377. 


GENERAL    INDEX.  467 

[ Reference's  are  to  pages.] 

Property — Continued. 
Improvement*  on,  75. 

Incumbranccs  on,  305,  308-370. 

Intrusion  on,  28!),  290. 

Leases  on,  125,  205-211,  230,  230,  370,  371. 

Misrepresentations  as  to,  200-205,  274,  290-298,  302,  303,  305-317. 

Mortgages  on,  37i-373. 

Obtained  by  False  Pretenses,  327. 

Opinions  as  to  Value  of,  300-304,  306. 

Options  on,  80,  158,  171,  172,  214,  215,  356-358. 

Ownership  of  Streets  Adjacent  to,  306-308. 

Party  Walls  on,  305. 

Payment  for,  70,  275-277,  371-373. 

Price  of.     (See  Price.) 

Purchase  of,  29-31.     (See  also  Purchaser;  also  Sale.) 

Restrictions  on,  308,  309. 

Sale  of.     (See  Sale.) 

Signs  on,  289,  290. 

Suburban,  373-375. 

Title  to,  309. 

Provisional  Contracts  of  Sale,  158,  1":?. 
Provisions,  General,  in  Contract  of  Sale,  378,  379. 
Punishment  for  Conspiracy,  328,  329. 

for  Criminal  Fraud,  328,  329. 
Purchase  Money  Mortgage,  372,  373. 
Principal.     (See  also  Purchaser.) 

Agreements  with  Broker.     (See  Agreements;  also  Contracts.) 

Bankruptcy  of,  87,  88. 

Bound  by  Broker's  Acts,  30,  37,  207-270. 

Broker  as,  47,  01,  62,  04,  06,  07,  151,  152. 
Must  be  Employed  by,  108,  109. 

Broker's  Obligations  to.     (See  Duty  of  Broker.) 

Concealment  by,  293-298. 

of  Material  Facts  from,  258. 

Death  of,  70,  90,  91. 

Definition  of,  21. 

Duty  to  Volunteer  Information,  311,  312. 

Employment  of  Several  Brokers  by.  95-101.  i:i5-i:57,  250..  251,  341-:U4. 

Failure  of,  to  Complete  Loan,  194-201.  2o:',.  204. 

"     "    Complete  Sale,  103,  117.  120,  120,  129,  159,  107-170,  175- 
180,  182-184,  188-192,  244,  246-248,  254. 

Fraud  of,  213,  260,  314,  316,  317. 

Good  Faith  of,  81,  84-87. 

Incapable.  281. 
Infinity  of,  88-90. 

Intervention  of,  135,  139,  227,  228,  251-253. 


468  GENEBAL   INDEX. 

[References  are  to  pages.] 

Principal — Continued. 

Liability  of.     (See  Liability.) 

Misrepresentations  by,  183,  184,  201,  260,  313-316. 

Need  Not  Recognize  Volunteer,  105-107. 

Non-Existent,  280,  281. 

Not  Bound  by  Broker's  Acts,  43,  44,  47. 

Notice  to  Broker  as  Notice  to,  270-273. 

Not  Owner  of  Property,  214-217,  360. 

Purchaser  as,  125,  126,  220,  221. 

"          Relying  upon  Statements  of,  310,  311. 

Ratification  of  Broker's  Unauthorized  Acts  by,  45,  51,  52,  65,  262-265. 
"  "    Volunteer's  Acts  by,  107-113. 

Refusal  of,  to  Accept  Loan,  203,  204. 

Relations  of  Agent  to,    255-259.     (See  also  Relations.) 
"  "  to  Agent,  250-254. 

Rights  after  Failure  of  Broker's  Efforts,  102,  103,  135,  173,  174,  252-254. 
"          "     Termination  of  Broker's  Employment,  81,  82,  85,  102,  103, 
252-254. 

Sale  Consummated  by,  100-102,  137-140,  251-254. 

Termination  of  Broker's  Agency  by,  80-86. 

Terms  of.     (See  Terms  of  Sale.) 

Undisclosed,  47,  70,  151,  152,  269,  270,  286-289. 
Purchase,  of  Property.     (See  Purchaser;  also  Sale.) 

Authority  of  Broker  to  Purchase,  29-31. 
Purchaser.     (See  also  Principal.) 

Abandonment  by,  135,  182,  183. 

of  by  Broker,  102,  103,  173,  174. 

as  Principal,  125,  126,  158,  159,  220,  221. 

Availability  of,  155-165. 

Broker  also  acting  for,  48-57,  66,  67,  151,  187,  272,  273. 
as,  65-67. 

Commissions  by,  125,  126,  183,  218-221. 

Disclosure  of,  159-161. 

Employment  of  Broker  by,  125,  126,  151,  152,  220,  221. 

Failure  of,  to  Complete  Purchase,  120,  181-184.     (See  also  Failure.) 

Fraudulent  Concealment  of  Facts  by,  296-298. 

Financial  Ability  of,  161-165. 

Must  Exercise  Caution,  312-316. 

Negligence  of,  310-317.     (See  also  Negligence.) 

Not  Ready,  and  Willing,  156-158. 
"      Responsible  for  Commissions,  183. 

Ready,  Willing  and  Able,  115-122,  141,  142,  155-158. 

Relying  upon  Statements  of  Vendor,  310,  311. 

Taking  Title  in  Another's  Name,  129. 

Undisclosed,  159-161. 


GENERAL   INDEX.  469 

[References  are  to  pages.] 

Q 

Qualified  Acceptance  of  Vendor's  Offer,  168. 

R 

Railroad  Consents,  370. 

Ratification  of  Broker's  Acts,  by  Acceptance  of  Proceeds,  262-265,  267. 
by  Implication,  111,  112,  202,  263. 
"    Promise  or  Payment  of  Commission,  51,  52. 
Equivalent  to  Employment,  107,  100-113. 
Intent  to  Must  be  Plain,  107,  110,  111. 
Must  be  with  Full  Knowledge,  112,  113. 
of  Broker's  Contract,  45,  319,  320. 
"        "         Unauthorized  Acts,  45,  109-113. 
"  Double  Employment,  51,  52. 
"  Subagent's  Acts,  71,  72. 
"  Volunteer's  Acts,  107-113. 
Real  Estate.     (See  Property.) 
Boards,  Rules  of,  235,  236. 
Broker.     (See  Broker.) 
Sale  of.     (See  Sale.) 
Reasonable  Time,  Termination  of  Agency  after,  81-86. 

What  Constitutes,  81-84,  147. 

Recitals  in  Contract  Not  a  Waiver  of  Fraud,  320,  321. 
Recovery  of  Commissions,  70-74,  102-104,  107,  108,  115-117,  203,  204,  206. 

207.     (See  also  Pleading.) 
by  One  Not  a  Broker,  231. 
"    Subagent,  70-74. 
Complaint  for,  331-340.     (See  also  Pleading.) 

Forms,  440-442,  445. 
Employment  Necessary  to,  107,  108. 
on  Leases,  206,  207. 
"    Loans,  203,  204. 

Requirements  for,  102-104,  115-117,  206,  207. 
Relations  of  Agent  to  Principal,  48-57,  59-66,  255-259. 

Must  Act  in  Interest  of  Principal,  48,  49,  59,  60,  64,  65,  256. 
"      Disclose  Relevant  Information,  258. 
"       Give  Faithful  Service,  256,  257. 
"      Not  Exceed  Authority,  257,  258. 
Responsibility  to  Principal,  255, 
Relations  of  Principal  to  Agent,  250-254. 
Relief,  When  Negligence  of  Vendee  is  No  Bar  to,  316,  317. 
Remedies  for  Fraud,  321-326. 
Renting  Agency,  75-77. 
Rents,  Authority  of  Broker  to  Collect,  31,  75,  76. 

Misrepresentations  as  to,  258,  307. 
Repairs,  75. 


470  GENERAL    INDEX. 

[References  are  to  pages.) 

Requirements  as  to  Earned  Commissions,  94-104,  117-125,  130-134,  166-174, 

240-242.     (See  also  Commissions.) 

as  to  Good  Faith  of  Broker,  54-56,  59-68,  150-154,  256-258,  272,  273. 
"    "   Interpleader,  351,  352. 
"   "    Price,  145-147. 

"    "    Procuring  Cause,  114-126.     (See  also  Procuring  Cause.) 
"    "    Recovery  of  Commissions,  102-104,  115-117,  206,  207. 
Rescission,  311. 

in  Case  of  Fraud,  318-326. 
Action  for,  322,  323. 
Must  be  Prompt,  319,  320,  323. 

Responsibility  of  Broker  to  Principal.     (See  Duty  of  Broker.) 
Restrictions  on  Property,  368,  369. 

Forms,  415,  416. 
Revocation  of  Broker's  Authority,  79-92.  (See  also  Termination.) 

Notice  of,  92. 
Rights  of  Principal,  after  Failure  of  Broker's  Efforts,  102,  103,  135,  173, 

174,  252-254. 

after  Termination  of  Broker's  Agreement,  81,  82,  85,  102,  103,  252-254. 
Rule  as  to  Broker  with  Discretion,  54-56. 

"    "  Caution  Required  of  Vendee,  313-316. 
"     "   Commissions,  93-104.     (See  also  subheads.) 
All  in  Excess  of  Fixed  Price,  226-228. 
on  Exchanges,  187-192. 
"    Loans,  194-200. 

When  Broker's  Efforts  Fail,  102,  103,  253,  254. 
"       Customer  Fails  to  Complete  Sale,  181,  182. 
"       Due,  238-240. 
"       Lease  Fails,  208-211. 

"       Principal  Fails  to  Complete  Sale,  176,  177. 
as  to  Completed  Transaction,  167. 
"     "   Double  Employment,  54-56. 

"     "  When  Broker  is  Procuring  Cause,  124,  125,  238-240. 
Rules  of  Real  Estate  Boards,  235,  236. 
Forms,  380-397. 


Sale  of  Property,  Agreements  for.     (See  Agreements.) 
Authority  of  Broker  to  Negotiate,  27-31. 

Forms,  426-431. 

Does  Not  Include  Authority  to  Exchange,  187. 
Broker  as  Procuring  Cause  of.     (See  also  Procuring  Cause.) 
Consummated  by  Another  Broker,  86,  135-137. 

"     Principal,  100-102,  137-140,  251-254. 
Contracts  for.     (See  Contracts.) 
Forms,  398-425, 


GENERAL    INDEX.  471 

[References  are  to  pages.] 

Sale  of  Property — Continued. 

Failure  of.     (See  Failure.) 

Must  be  on  Employer's  Terms,  141-149,  156-158,  167-109,  202,  203. 

Nature  of,  353,  354. 

on  Installment  Payments,  248,  249. 
Forms,  415-418. 

Option  Not  a,  158,  171,  172. 

Oral  Understandings  as  to,  363,  364. 

Previous,  86,  87. 

Termination  of  Agency  by,  79,  80. 

"     Previous,  86,  87. 

Terms  of.     (See  Terms.) 

Usual  Methods  of  Closing,  354-356. 
Salesman's  Contract,  Forms,  429-431. 

San  Francisco,  Schedule  of  Fees,  Charges  and  Commissions,  Forms,  397. 
Schedules  of  Fees,  Charges  and  Commissions,  Forms,  380-397. 
Seal,  Contracts  Under,  40,  46,  47,  269,  270,  334. 
Second  Mortgages,  372,  373. 
Secret  Profits,  56-68,  151,  152,  272. 

Combinations  to  Secure,  59,  67,  68. 
Seller.  (See  Principal.) 

Signature  to  Contracts,  46,  47,  360-362.     (See  also  Signing.) 
Signing  Contracts  of  Sale,  36-47,  360-362. 

Authority  of  Broker,  26,  27,  36-47,  360-362. 

Broker's  Incidental  Power  as  to,  44,  45. 

Corporation's  Signature,  47,  361,  362. 

Executor's  Signature,  360,  361. 

Powers  as  to  Conferred  by  Appointment  as  Agent,  36-3S.  4:5-46. 
"    Instructions  to  Sell,  37,  115-117,  187. 

Statutory  Requirements  as  to,  38,  39. 
Signs,  Affixing,  289,  290. 
Silence  Not  Usually  a  Fraud,  293-298. 

Special  Commission  Agreements,  115,  118,  121-124,  128,  146,  170,  178,  179, 
218-220,  223-228,  241-248,  338,  339. 

as  to  Title,  178,  179. 

Pleading,  338,  339. 

Special  Clauses  in  Contract  of  Sale,  366,  377,  378. 
St.  Louis,  Application  for  Loan,  Forms,  433-435. 

Schedule  of  Fees,  Charges  and  Com  missions,  392,  393. 
Statute  of  Frauds,  26,  31-35,  38,  39,  45,  35(5,  357. 

Agreements  Not  to  be  Performed  Within  a  Year,  33,  34. 

as  Affecting  Contracts  of  Sale,  38,  39,  356,  357. 
Streets,  Ownership  in,  366-368. 
Subagents,  70-74. 
Suburban  Property,  373-375. 

Maps  of,  373-375. 


472  GENERAL   INDEX. 

[References  are  to  pages.] 

Suit.    (See  Pleading;  also  Interpleader.) 
Surrender  of  Contract,  46. 

T 

Tax  on  Right  to  Act  as  Broker,  24,  25. 
Tenant,  75-77. 

Dispossession  of,  76,  77,  211. 

Failure  to  Consummate  Lease,  208-211. 

Liability  for  Commissions,  207. 
Termination  of  Broker's  Authority,  24,  33,  76,  79-92. 

as  to  Third  Parties,  92. 

at  Pleasure  of  Principal,  33,  80-86. 
General  Rule,  83,  84. 

by  Bankruptcy,  87,  88. 

"    Broker,  33,  80,  84. 

"   Death,  76,  90,  91. 

"   Destruction  of  Property,  87. 

"    Fraud  of  Broker,  91. 

"    Insanity,  88-90. 

"   Mutual  Consent,  79. 

"    Performance,  79,  80. 

"   Previous  Sale,  86,  87. 

"    Principal  after  Reasonable  Time,  81-86. 
General  Rule,  83,  84. 

"    Severance  of  Joint  Interest,  87. 

Good  Faith  Must  be  in,  81,  84-87. 

Must  be  Timely,  86. 

of  Naked  Authority,  80. 

Principal's  Rights  after,  81,  82,  85,  102,  103,  252-254. 

When  for  Definite  Time,  84. 
Termination  of  Renting  Agency,  76. 
Terms  of  Sale,  141-149.     (See  also  subheads.) 

Acceptance  by  Owner  of  Different,  95,  144,  145. 

Broker  Must  Secure  Best  Offer  Possible,  49,  152,  153. 

Cannot  be  Changed  after  Acceptance  by  Purchaser,  142,  143. 

Change  of,  95,  142-147,  157,  168,  169,  171. 

Principal's  Terms  Must  be  Met,  141-147,  156-158,  167-169,  202,  203. 

When  Not  Specified,  52-56,  66,  67,  142,  148,  156,  167. 
Third  Parties,  Authority  of  Broker  as  to  after  Revocation,  92. 

Broker's  Contract  with  after  Death  of  Principal,  91. 

Liability  of  Broker  to,  275-290. 

"  Principal  to,  266-274. 
Time  for  Delivery  of  Deed,  375,  376. 

of  Performance,  31-35,  80-84,  147,  148. 
Title,  Agreement  to  Wait  for  Closing  of,  245-247. 

Approval  Clause  in  Contract  of  Sale,  377,  378. 

Closing  of,  376. 


GENERAL   INDEX.  473 

[References  are  to  pages.] 

Title— Continued. 

Defective,  177-179,  182,  184,  188-192,  194-201,  244,  246-248. 

Misrepresentations  as  to,  309. 

Opinions  as  to  Marketability  of,  179. 

Purchaser  Taking  in  Another's  Name,  129. 

Special  Agreements  as  to,  178,  179. 

Vendor's  Warranty  of,  247,  248. 
Transaction  Must  be  Complete,  166-174. 
Trespassing  by  Broker,  289,  290. 
Trustees,  Liability  for  Commissions,  217,  218. 

Power  to  Make  Contract  of  Sale,  360,  361. 

Signature  to  Contract  of  Sale,  360,  361. 

U 

Unauthorized  Acts  of  Broker,  37,  106-113,  267,  268,  282-286. 
Acts  of  Volunteer,  106-108. 
Contracts, 
Ratification  of,  45. 
Liability  of  Agent  for,  281-286. 
Undisclosed  Principal,  47,  70,  151,  152,  269,  270,  286-289. 

Purchaser,  159-161. 
Unsuccessful  Efforts.     (See  Failure.) 
Unsupported  Agreements  Deferring  Commissions,  241-243. 
Usage.     (See  Custom.) 
Usury  of  Broker,  274. 

V 

Valid  Agreements  Deferring  Commissions,  243. 
Value,  Assertions  and  Opinions  as  to,  300-304. 

Misrepresentations  as  to,  306. 
Vendee.     (See  Purchaser.) 

Meaning  of  Term,  21. 
Vendor.    (See  Principal.) 

Meaning  of  Term,  21. 
Volunteers,  105-113,  231,  232. 

Ratification  of  Acts  by  Principal,  107-113. 

W 

Waiver  of  Commissions,  168,  224. 
of  Fraud,  318-321. 

Not  Effected  by  Recitals  in  Contract,  320,  321. 
What  Constitutes,  319,  320. 
of  Right  to  Disclosure  of  Purchaser,  160,  161. 
Walls,  Party,  365. 

Washington,  Authority  of  Broker  to  Purchase  and  Sell  Property,  31. 
Who  May  Act  as  Broker,  22-25. 

Written  Authority  of  Broker,  26-34,  38-42,  44,  46,  71,  201,  202. 
Forms,  426-431. 


1917  SUPPLEMENT 


THE  LAW  OF 

REAL  ESTATE  BROKERS 


BY 

FRED   L.  GROSS 

Of  the  New  York  Bar 


NEW   YORK 

THE  RONALD   PRESS  COMPANY 
1917 


Copyright,  1917,  by 
THE  RONALD  PRESS  COMPANY 


William  G.  Hewitt  Pi-ess,  Brooklyn,  Print? 


PREFACE  TO  SUPPLEMENT 

Probably  no  book  was  ever  written  in  which,  upon  completion, 
an  honest  author  could  not  see  opportunities  for  improvement. 
And,  in  the  law,  where  new  principles  are  being  evolved  and 
old  principles  are  being  wrested  to  fit  new  situations,  the  period 
which  has  elapsed  since  the  publication  of  "The  Law  of  Real 
Estate  Brokers"  will  well  justify  the  presentation  of  additional 
authorities  and  material. 

No  endeavor  will  be  made  to  summarize  the  additions  which 
these  supplemental  pages  supply.  A  cursory  investigation  will 
satisfy  the  reader  that  all  of  the  added  material  relates  to  sub- 
stantial and  essential  principles  and  problems  of  the  subject 
matter  of  the  volume. 

In  some  of  the  sections  of  this  supplement  cross-references 
have  been  made  to  other  sections.  Wherever  this  occurs,  the 
section  referred  to  should  be  consulted  both  in  the  supplemental 
pages  and  in  the  original  volume.  Such  references  are  frequently 
intended  to  call  the  reader's  attention  to  the  original  text  where 
a  related  or  antithetical  feature  is  discussed. 


FRED    L.    GROSS. 


189  Montague  Street, 
Brooklyn,  New  York, 
June  1,  1917. 


CONTENTS 


Part  I — Powers,  Authority  and  Rights  of  Broker 

Chapter  Page 

I     INTRODUCTORY  .          .          .          .          .11 

§    2.    Application  of  Term 

II     WHO  MAY  ACT  AS  BROKER.     LICENSE  RE- 
QUIREMENTS .          .          .          .          .11 

§  10a.  Public  Officials 

lOb.  Attorney  Acting  as  Broker 

11.     License  or  Tax  on  Right  to  Act  as  Broker 

lla.  License  of  Insurance  Brokers 

III  WRITTEN  AND  ORAL  AUTHORITY  OF  BROKER     17 

§  13.     Form  of  Authorization 

13a.  Written  Authorization  Required  by  Statute 

16.  New  Jersey;  Authority  to  Sell  or  Exchange 

17.  California;  Authority  to  Purchase  or  Sell 

18.  Missouri ;  Authority  to  Sell 

21.     Washington;  Authority  to  Sell  or  Purchase 
22a.  Oregon ;  Authority  to  Sell  or  Purchase 
22b.  Arizona ;  Authority  to  Sell  or  Purchase 
22c.  Indiana;  Authority  to  Sell 

IV  BROKER'S  POWER  TO  SIGN  CONTRACT  .          .     20 

§  28.     Broker's  Authority  to  Sign  Contract 

29.  Powers  Conferred  by  Instructions  to  Sell 

Property 

30.  Powers     Conferred    by    Appointment    as 

Agent 

37.  Rule  in  Other  States 

38.  When  Broker  has  Authority  to  Sign  Con- 

tract 

41.     Dissenting     Opinions     as     to     Incidental 
Power  to  Contract 

V     BROKER  ACTING  FOR  BOTH  PARTIES       .          .     22 

§  49.     Acting  for  Both  Parttes  a  Breach  of  Con- 
tract 

51.  The  Rule  Applies  to  Exchange  of  Property 

52.  Acting     for     Both     Parties     with     Their 

Knowledge 

54.  Broker  Vested   with   No   Discretion   May 

Act  for  Both  Parties 

55.  Compensation    of    Broker    Without    Dis- 

cretion 

58.     How  Question  of  Double  Employment  Is 
Raised 

V 


VI  CONTENTS 

Chapter  Page 

VI     BROKER'S  RIGHT  TO  INTEREST  IN  PROFITS     .     25 

§  62.     Agent  May  Not  Also  Act  as  Principal 
63.    Agent  May  Not  Make  Secret  Profits 

66.  Act  of  Agent  in  His  Own  Interest  Pre- 

sumed Injurious 

67.  Act  of  Agent  in  His  Own  Interest  Void- 

able, but  May  Be  Ratified 

68.  Agent  May  be  Personally  Interested  with 

Consent  of  Principal 
69a.  When  Minimum  Price  Is  Fixed 
70.     Broker  May  Not  Lawfully  Combine  with 

Others  to  Secure  Secret  Profits 

VII     GENERAL  AUTHORITY  OF  BROKER  .          .     28 

§  74.     Broker's  Power  to  Employ  Other  Brokers 
75a.  Liability  of  Renting  Agent   for  Violation 

of  Labor  Law 
78.     Insurance  Brokers 

78a.  Compensation   for  Appraisals  and   Giving 
Expert  Testimony 

VIII     REVOCATION  OF  BROKER'S  AUTHORITY  .     33 

§  80.     Termination  of  Agency  by  Mutual  Consent 

82.  Termination    of    Agency    at    Pleasure    of 

Principal 

83.  Termination  by  Principal  After  Lapse  of 

Reasonable  Time 
85.  Revocation  of  Agency  by  Principal  Must 

Be  in  Good  Faith 
87.  Termination  of  Agency  by  Previous  Sale 

Part  II — Commissions  and  Their  Recovery 

IX     GENERAL  RULES  AS  TO  COMMISSIONS  .          .     35 

§  97.     Respective  Rights  of  Brokers  when   Sev- 
eral are  Employed 
98.     Rule    as    to    Commissions    when    Several 

Brokers   are   Employed 

100.     Liability    for    Commissions    when    Princi- 
pal Negotiates  Sale 

X     BROKER  MUST  BE  EMPLOYED       .          .          .37 

§104.     Volunteers  Not  Entitled  to  Commission 
107.     Manner  of  Employment 
111.     Ratification  by  Implication 

XI     BROKER  MUST  BE  PROCURING  CAUSE  OF  SALE     38 

§116.     Procuring  Cause 
117.     What  is  Required  to  Constitute  a  Broker 

a  "Procuring  Cause" 
119.     General  Rule  as  to  "Procuring  Cause" 

121.  Effect  of  Promises  to  Pay  Commission 

122.  Unsuccessful   Efforts 


CONTENTS  Vll 

Chapter  Page 

125.  Effort  Required  of  Broker 

126.  Presence  of  Broker 

127a.  Notifying    Principal     That    Customer     is 

Broker's  Client 
128.     Advertising 
130.     Consummation  of  Sale  by  Principal 

XII     SALE  MUST  BE  ON  EMPLOYER'S  TERMS         .     44 

§132.  Purchaser  Must  Agree  to  Seller's  Terms 

133.  All  of  Seller's  Terms  Must  be  Met 

134.  Acceptance  by  Owner  of  Different  Terms 

135.  Broker's  Commission,  if  He  is  "Procuring 

Cause,"    Not   Affected   by   Variation   of 
Terms 

136.  Requirements  as  to  Price 

139.     Liability  of  Broker  for  Failure  to  Sell 

XIII  BROKER  MUST  ACT  IN  GOOD  FAITH     .          .     48 

§141.     Good  Faith 
142.     Accepting  Pay  from  or  Acting  for  Other 

Party  to  the  Transaction 

145.  When  Refusal  to  Disclose  Information  is 
Not  Bad  Faith 

XIV  AVAILABILITY  OF  PURCHASER       .          .          .52 

§147.  Ready  and  Willing  to  Purchase 

148.  Purchaser  Not  Ready  and  Willing 

149.  Procuring  Person  Who  Takes  Option 

150.  Change  of  Mind  by  Venctt.i 

151.  Disclosure  of  Purchaser 

153.  Financial  Ability  of  Purchaser 

154.  When  Financial  Ability  of  Purchaser  Need 

Not  be   Shown 

155.  Burden  of  Proof  as  to  Financial  Ability  of 

Purchaser 

XV     TRANSACTION  MUST  BE  COMPLETE     .          .      57 

§157.  What  Constitutes  a  Completed  Transac- 
tion 

158.  General  Rule  as  to  Completeness  of  Trans- 
action 

163.     Options  and  "Alternative"  Contracts 

XVI    FAILURE  OF  PRINCIPAL  TO  COMPLETE  .         .     58 

§167.     General  Rule  as  to  Failure  of  Principal  to 

Complete 

168.     Defective  Title  as  Cause  of  Failure 
170.     Special  Causes  of  Failure 

XVII     FAILURE  OF  CUSTOMER  TO  COMPLETE  .          .     60 

§172.     General  Rule  as  to  Failure  of  Customer 

173.  Abandonment  of  Broker  by  Customer 

174.  Misrepresentations  by  Vendor 


viii  CON  TENTS 

Chapter  Page 

XVIII     COMMISSIONS  ON  EXCHANGES  OF  PROPERTY     62 

§177.     Commissions  on  Exchanges 
179.     Authority  to  Sell  Does  Not  Give  Authority 
to  Exchange 

181.  Rule  When  Contract  Has  Been  Executed 

182.  Reason  for  Rule 

183.  Rule  as  Affected  by  Broker's  Bad  Faith 

XIX     COMMISSIONS  ON  LOANS     .          .          .          .64 

§186.     New  York  Rule 

188.     The  Rule  in  Some  of  the  Other  States 
191.     Failure  to   Complete  on  Account  of   De- 
fects, etc. 
195.     Amount  of  Commissions  on  Loan 

XX     COMMISSIONS  ON  LEASES   .          .  68 

§197.     When     Broker's     Obligations     Are     Per- 
formed 
198.     General    Requirements    for    Recovery    of 

Commissions 

198a.  Commissions  on  Renewal  of  Lease 
202a.  Commission  on  Sale  of  Leasehold 

XXI     WHO  Is  LIABLE  FOR  COMMISSIONS       .          .71 

§204.     The     Employer     Is     Usually     Liable     for 
Broker's  Commissions 

205.  Promises  to  Pay  Commissions 

206.  Liability    of    Persons    Not    Owning    the 

Property 

207.  Trustees,  Executors,  and  Guardians 
207a.  Corporations 

208.  Commissions  from  Purchaser 

209.  Purchaser's  Promise  to  Pay  Commission 
210a.  Purchaser's  Liability  for  Commissions  on 

Refusal  to  Purchase 

210b.  Misrepresentation  by  Purchaser  to  Seller 
as  to  Who  is  Broker 

XXII     AMOUNT  OF  COMPENSATION        .          .          .80 

§214.     Measure  of  Compensation 
214a.  Promise  to  Pay  Increased  Commissions 

216.  Agreements   for   All   in   Excess   of   Fixed 

Price 

217.  Rule  as  to  All  in  Excess  of  Fixed  Price 
224.     Proof  of  Custom 

226.     Compensation   in   the   Absence   of  Agree- 
ment or  Usage 

XXIII     WHEN  COMMISSIONS  ARE  DUE  .          .          .83 

§228.     Rule  as  to  When  Commissions  are  Due 

230.  Unsupported    Agreements     to    Wait     for 

Commission 

231.  Valid  Agreements  Deferring  Payment  of 

Commissions 


CONTENTS  IX 

Chapter  Page 

232.  Contingent  Commission  Agreements 

233.  Construction  of  Abutments  to  Wait  until 

Title  is  Closed 
235.     Commissions  on  Instalment  Sales 

XX  Ilia  St:.\i>AY  SALES 87 

§235a.  General  Statement 

2351).  Sunday  Contracts  Not  Prohibited  by  Com- 
mon Law 
235c.  Liberal  or  Strict  Construction  of  Sunday 

Laws 

235d.  Commissions  on  Sunday  Sales 
235e.  Sunday  Laws  of   Various  States 
235f.   Effect  of  Sunday  Laws  on  Executory  and 

on  Executed  Contracts 

235g.  Sunday    Statutes    Which    Do    Not    Affect 
Sunday  Contracts 

Part  HI — Principal  and  Agent 

XXIV      Puixni'AL's  RELATIONS  TO  AGENT       .          .     93 

§237.     Principal  May  Employ  Several  Brokers 

239.  Exclusive  Agency 

240.  Intervention  by  Principal 

242.     Rule  when  Broker's  Efforts  Fail 

XXV     AGENT'S  RELATIONS  TO  PRINCIPAL       .          .     95 

§249.     Agent's  Power  to  Make  and  Indorse  Ne- 
gotiable Paper 

XX VI     LIABILITY  OF  BROKER  AND  PRINCIPAL  .          .     96 

§252.     Misrepresentations  by  Brokers  and  Agents 
257.     Fraud  of  Agent;  Pleading 

XXVII     LIABILITY  OF  PRINCIPAL  TO  THIRD  PARTIES    97 

§260.    Liability  of  Principal  for  Agent's  Wrong- 
doing 
264.     Notice  to  Agent  as  Notice  to  Principal 

XXVIII     LIABILITY  OF  BROKER  TO  THIRD  PARTIES       .     99 

§271a.  Personal  Liability  of  Agent  on  Contracts 
273.    Liability   of    the   Agent   on   Unauthorized 
Contract 

Part  IV — Fraud 

XXIX     WHAT     ('oxsrrrrTKS     THATO.       ACTS     NOT 

USUALLY  CONSIDERED  FRAUDULENT  .    100 

§285.     Promises,  Hopes,  dr. 

286.  Promises  and  False  Representations 

287.  Opinions;   Expressions  of  Value 

289.     Opinions    Amounting    to    Affirmations    of 

Fact 
291.     When  Expression  of  Opinion  Fraudulent 


X  CONTENTS 

Chapter  Page 

XXX     WHAT  CONSTITUTES  FRAUD.    ACTS  USUALLY 

CONSIDERED  FRAUDULENT        .          .          .    104 

§293.     Representation    That    Certain    Price    Had 
Been  Offered 

294.  Representation  as  to  Value  and  Price  Paid 

for  Property 

295.  Representations  as  to  Rentals 

297.     Representations  as  to  Situation  of  Property 
300.     Representations  as  to  Title  of  Vendor 

XXXI     NEGLIGENCE  ON  PART  OF  VENDEE        .          .    105 

§307.     Negligence  No  Bar  to  Relief  in  Cases  of 
Wilful  Fraud 

XXXII     WAIVER.     RESCISSION.     REMEDIES       .          .   106 

§309.     Waiver  of  the  Fraud 
310.     What  Constitutes  Waiver  of  Fraud 
317.     Offer  to  Restore 

319.     Pleading  Fraud  Committed  by  More  Than 
One 

Part  V — Procedure 

XXXIV     PLEADING 108 

§331.     Pleading  the  Facts  Constituting  the  Cause 
of  Action 

333.  Facts  to  be  Stated 

334.  Full    Performance    and    Excuse    for    Per- 

formance 

335.  Pleading  Special  Agreements 
336a.  Bill  of  Particulars 

336b.  Preference   of    Broker's   Action    on   Trial 

Calendar 
337.     Pleading  Acts  Done  by  Agent 

XXXV     INTERPLEADER  .          .          .          .          .112 

§345.     Requisites  of  Interpleader 

Part  VII — Schedules  and  Forms 

XXXIX     FORMS   OF   CONTRACTS   FOR   SALE   OF   RKAL 

ESTATE          .          .          .          .          .          .114 

Form  17.     Contract  of  Sale.    New  York  City 

XL     MISCELLANEOUS  FORMS       .        •  .          .          .114 

Form  36a.  Exclusive  Agency  Agreement 

40a.  Acceptance  of  Mortgage  Application ; 
General  New  York  Title  Companies' 
Form ;  Personal  Liability  of  Appli- 
cant 
43a.  Agreement  for  Compensation  for  Loan 


The  Law  of  Real  Estate  Brokers 
1917  Supplement 


Part  I — Powers,  Authority  and  Rights  of  Broker 


CHAPTER  I 
INTRODUCTORY 

§  2.    Application  of  Term  (  p.  19)* 
Add  to  footnote  3: 

Geddes  v.   Van  Rhec,   126   Minn.   517;    148  N.   W.   549    (1914). 


CHAPTER  II 

WHO  MAY  ACT  AS  BROKER.    LICENSE 
REQUIREMENTS 

§    lOa.      Public  Officials    (p.   24) 

A  deputy  tax  commissioner  holds  a  quasi-judicial  office  and  it  is 
against  public  policy  to  enforce  an  alleged  contract  to  pay  him  com- 
missions as  a  broker  for  procuring  a  purchaser  for  lands,  where  the 
contract  was  the  result  of  the  plaintiff's  activities  ex  colore  officii.1 


*Page  numbers  following  section  headings  refer  to  the  body  of  the  original  book. 
'Moorehead  v.  Realty  Associates,  166  App.   Div.  782;  152  N.  Y.   Suppl.  342   (1915); 
affd.,  220   N.   Y.— (1917),   no  opinion. 

11 


12  POWERS,    AUTHORITY    AND    RIGHTS    OF    BROKER 

§  10b.     Attorney  Acting  as  Broker  (p.  24) 

An  attorney  employed  solely  to  procure  a  loan  for  a  client  acts 
merely  as  agent  and  communications  between  them  in  regard  to  the 
loan  are  not  privileged.  This  is  so,  although  the  attorney  had  repre- 
sented the  client  professionally  in  other  transactions.2 

Where  an  attorney  at  law  procures  a  mortgage  loan,  he  does  not 
act  in  his  capacity  as  an  attorney  at  law,  but  like  any  other  agent, 
and  therefore  the  necessity  of  alleging  and  proving  that  he  is  a 
regularly  licensed  attorney  at  law  does  not  exist. 


§  11.     License  or  Tax  on  Right  to  Act  as  Broker  (p.  24) 

Power  and  authority  exist  in  the  legislature  to  license  and  regu- 
late certain  vocations,  but  such  power  and  authority  are  dependent 
upon  a  reasonable  necessity  for  their  exercise  to  protect  the  health, 
morals,  or  gejneral  welfare  of  the  state.3 

TT~would  be  impracticable  to  present  the  various  statutory  or 
local  enactments  upon  the  subject  of  licenses  to  do  business  as  a 
real  estate  broker.  In  order,  however,  to  convey  a  general  idea  as 
to  how  these  requirements  are  ordinarily  regulated  by  local  ordi- 
nances, Chapter  15  of  the  Chicago  Code  of  City  Ordinances  (1911) 
relating  to  licenses  of  real  estate  brokers  is  given  below : 

BROKERS 

192.  License — Application — Fee.      It  shall  be  unlawful 
for  any  person  or  corporation  to  engage  in  the  business  or 
act  in  the  capacity  of  a  broker  within  the  city,  without  first 
obtaining  a  license  therefor.     Application  for  such  license 
shall  be  made  in  writing  to  the  Mayor,  and  upon  payment  to 
the  City  Collector  of  the  sum  of  $25,  a  license  shall  be  issued 
to  the  applicant  by  the  City  Clerk.     Such  application  shall 
state  the  name  of  the  person  or  corporation  and  the  location 
of  the  place  or  places  of  business  for  which  such  license  is 
desired. 

193.  Change  of  Location.     If,   after  the  issuance   and 
delivery  of  a  license  under  the  provisions  of  this  chapter,  any 
change   shall  be  made   in   the  place   or  places  of  business 
covered  thereby,  no  business  shall  be  carried  on  in  such  new 


'Lifschitz  v.  O'Brien,  143  App.  Div.  180;  127  N.  Y.  Suppl.  1091;  2  Civ.  Pro.  Rep. 
(N.  S.)   236   (1911). 

"People  v.   Ringe,   197  N.  Y.   143;   90  N.   E.  451    (1910). 


Wild    .MAY    ACT    AS    BROKER  13 

location  until  a  notice  shall  have  been  given,  in  writing,  to 
the  City  Collector. 

194.  Broker  Defined.    A  broker  is  one  vj\\n  \*  pngnpwl 
for  others  in  negotiating  contracts  relative  to  property  with 
the  custody  of  which  he  has  nn  fonrprn. 

195.  Real  Estate  Broker  Defined.   ^A.  real  estate  broker 
is  one  who  is  engaged  for  others   in  negotiating  rnntrarts 
relative  to  real  estate. 

196.  Insurance  Broker  Defined.     An   insurance  broker 
shall  include  any  and  every  person  or  corporation  engaged, 
for  others,  in  negotiating  contracts  for  insurance  on  lives, 
buildings,  vessels  or  other  property,  either  directly  or  through 
any  other  broker  or  through  any  insurance  agent,  or  with 
any   insurance   company   other   than   an   insurance  company 
of  which  such  person  shall  be  an  employee. 

197.  Employees  Acting   as  Brokers.     Any  person   em- 
ployed by  a  person  or  corporation  licensed  as  a  broker  under 
the  provisions  of  this  chapter,  who  shall  himself  engage  in 
the  business  or  act  in  the  capacity  of  a  broker,  shall,  notwith- 
standing the   fact  of  such  employment  be  amenable  to  all 
the  provisions  of  this  chapter  and  shall  be  required  to  take 
out  a  broker's  license. 

198.  Penalty.     Any  person  or  corporation  violating  any 
of  the  provisions  of  this  chapter  shall  be  fined  not  less  than 
twenty-five  dollars  nor  more  than  two  hundred  dollars  for 
each  offense. 

It  has  been  said  that,  "it  is  the  law  that  if  a  statute  or  ordinance 
declares  it  to  be  unlawful  for  a  person  to  act  as  a  broker  without  a 
license  and  prescribes  a  penalty  for  its  violation,  an  unlicensed  broker 
cannot  recover  upon  the  contract  for  commissions,  even  though  the 
statute  or  ordinance  does  not,  in  terms,  declare  the  contract  void."4 

Yet  the  same  court  has  held  that  where  an  action  is  brought  on 
a  promise  to  pay  for  services  rendered  for  negotiating  a  real  estate 
transaction,  the  fact  that  plaintiff  is  not  a  licensed  broker  is  no 
defense.5 

And  so,  it  has  been  said  that,  "under  a  Statute  passed  for  the 
purpose  of  raising  revenue,  which  provides  that  every  person  or  firm 
engaged  in  the  business  of  buying  or  selling  real  estate  on  commis- 
sion shall  pay  the  sum  of  $10  for  each  county  in  which  he  or  they  may 


<Frif,llan<l  v.   Iscnstein,   101   111.   App.   109   (1915);  Fucrst  v.   Stone,   192  111.  App. 
256   (1915). 

•V.ibons  v.    Williams,   191    111.   App.   594   (1915). 


14  POWERS,    AUTHORITY    AND    RIGHTS    OF    BROKER 


conduct  such  business,  and  that,  before  such  persons  shall  be  authorized 
to  open  up  or  carry  on  such  business,  they  shall  go  before  the  ordi- 
nary of  the  county  in  which  they  propose  to  do  business  and  register 
their  names  and  the  business  they  propose  to  engage  in,  the  place 
where  it  is  to  be  conducted,  and  shall  then  pay  their  tax  to  the  col- 
lector, and  that  any  person  failing  to  comply  with  the  foregoing 
requirements  shall  be  guilty  of  a  misdemeanor,  but  which  does  not 
provide  that  the  business  conducted  by  such  person  failing  to  comply 
with  the  statute  shall  be  void  and  unenforceable,  it  is  not  a  defense 
to  a  suit  brought  by  such  person  selling  or  buying  real  estate  on 
commission,  to  recover  commissions  on  sales  of  real  estate  made  by 
him,  that  he  had  failed  to  pay  the  tax  and  register  as  required  by 
statute."6 

An  act  in  violation  of  a  statute  or  municipal  ordinance  forbidding 
it,  may,  as  a  general  rule,  be  said  to  be  void,  but  when  the  statute  or 
ordinance  is  for  the  purpose  of  raising  revenue,  and  does  not  make 
the  act  itself  void,  and  the  act  is  not  malum  in  se  nor  detrimental  to 
good  morals,  many  courts  have  made  exceptions  and  will  not  hold 
such  act  absolutely  void.  This  rule  is  generally  applied  to  statutes 
and  ordinances  regulating  or  licensing  the  business  of  real  estate 
brokers.7 

Where  such  statute  or  ordinance  does  not  provide  that  a  failure 
to  pay  the  tax,  or  to  procure  the  license,  or  to  register,  renders  any 
agreement  of  the  broker  void,  the  penalty  for  a  violation  of  the 
statute  or  ordinance  may  be  said  to  be  against  the  person  of  the 
agent,  and  not  against  his  act.  The  law  may  provide  for  punishment 
as  a  misdemeanor,  but  that  would  not  render  the  broker's  agreement 
unenforceable  unless  the  statute  or  ordinance  expressly,  or  by  nec- 
essary implication,  makes  them  unenforceable.8 

The  legality  of  a  broker's  agreement  is  not  affected  by  his  failure 
to  comply  with  a  requirement  in  which,  as  a  revenue  measure,  only 
the  state  is  concerned.9 

An  ordinance  making  it  unlawful  for  one  to  engage  in  the  business, 
or  act  in  the  capacity,  of  a  broker,  within  the  city,  without  first  ob- 
taining a  license,  applies  only  to  persons  engaged  in  the  business  of 


"Syllabus  by  the  court  in  Toole  v.  Wiregrass  Dev.  Co.,  142  Ga. — ;  82  S.  E. 
514  (1914). 

,7See  Hughes  v.  Suell,  28  Okl.  828;  115  Pac.  1105;  34  L.  R.  A.  (N.  S.)  1133;  Ann. 
Cas.  1912  U,  374;  Vermont  Loan  Co.  v.  Hoffman,  5  Idaho  376;  49  Pac.  314;  37  L. 
R.  A.  509;  95  Am.  St.  Rep.  186;  Coates  v.  Locust  Point  Co.,  102  Md.  291;  62  All. 
625;  5  Ann.  Cas.  895;  Watkins  Land  Mortgage  Co.  v.  Thetford,  43  Tex.  Civ.  536; 
96  S.  W.  72. 

8Toole  v.  Wiregrass  Dev.  Co.,  supra. 

•Swift  v.  Mocre,  (Ga.  App.)  82  S.  E.  914  (1914). 


WHO    MAY   ACT    AS   BROKKIt  15 

brokerage  as  an  occupation  or  vocation  and  not  to  a  person  nego- 
tiating a  single  sale.10 

Legislation  requiring  a  license  does  not  prevent  a  person  whose 
business  and  occupation  was  not  that  of  a  real  estate  broker  from 
receiving  compensation  for  services  rendered  in  buying  and  selling 
real  estate  belonging  to  another.11 

A  city  ordinance  requiring  a  license  to  be  taken  out  by  an  employee 
of  a  broker  where  he  shall  himself  engage  in  the  business,  or  act  in 
the  capacity  of  a  broker,  is  held  not  to  apply  to  mere  employees  of 
brokers,  though  they  are  paid  for  their  work  a  certain  portion  or 
per  cent  of  the  commissions.12 

^1/Where  a  broker's  license  is  issued  to  a  partnership,  and  on»  of 
the  partners  succeeds  to  the  business  of  the  partnership  upon  disso- 
lution of  the  firm  and  continues  busiiK-ss  individually  at  the  same 
location,  lie  is  to  he  considered  a  licensed  broker.13 

Where  a  contract  for  the  payment  of  a  commission  for  the 
exchange  of  real  estate  is  made  in  another  state  (Michigan),  a  ciry 
ordinance  making  it  unlawful  for  a  person  to  act  in  the  capacity  of 
a  broker  in  a  city  within  the  state  (Illinois)  has  no  application,  such 
as  to  render  the  contract  invalid.14 

§  11  a.     License  of  Insurance  Brokers  (p.  25) 

In  some  states,  persons  acting  as  insurance  brokers  are  required 
to  be  licensed.15  In  New  York,  §  91  of  the  Insurance  Law  provides 
that  no  life  insurance  company  doing  business  in  the  state  shall  pay 
to  any  person  any  commission  for  services  in  obtaining  new  insurance 
unless  such  person  has  procured  a  certificate  of  authority  to  act  as 
agent  of  such  company  as  in  the  section  provided,  and  that  no  person 
shall  act  as  agent  or  receive  any  commission  for  services  in  obtaining 
new  insurance  for  such  life  insurance  company  without  procuring 
such  a  certificate.  The  section  further  provides  that  such  certificate 
shall  be  issued  by  the  Superintendent  of  Insurance  of  the  State  only 
upon  the  written  application  of  persons  desiring  such  authority, 
upon  a  form  approved  by  the  Superintendent,  giving  such  information 
as  he  may  require,  and  that  he  shall  have  the  right  to  refuse  to  issue 
or  renew  any  such  certificate,  in  his  discretion.16  The  section  was 
held  unconstitutional  by  the  lower  court,  on  the  ground  that  it  vested 


10Ross  v.  New  South  Farm  &  Home  Co.,  191   111.  App.  353  (1915). 
"Roeder   v.    Butler,    19   Pa.    Super.    Co.,   604    (1902),   in   which    the   plaintiff   was   a 
lawyer.     Cf.   §   195. 

12Thorpe  v.   Weber,   191   111.   App.  2    (1914).     See  Chicago  City  Ordinances,  supra. 

"Friedland  v.   Isenstein,  supra. 

"Egeland  v.   Schefflcr,    189  111.   App.   426    (1914). 

1BSee  §  78. 

1CN    Y    Consol.  Laws,  Ch.  28,  §  91,  as  amended  by  L.  1909,  Ch.  301. 


16  POWERS,    AUTHORITY   AND    RIGHTS    OP    BROKER 

in  the  Superintendent  an  unrestricted  discretion  to  grant  or  withhold 
a  license  at  his  pleasure,  unregulated  by  any  common  standards  of 
qualifications  or  conditions,  and  thus  vested  arbitrary  powers  in  him 
to  prevent  any  person  from  pursuing  a  lawful  calling.17  This  deter- 
mination was  reversed,18  the  court  saying:  "The  right  of  every 
person  to  pursue  any  lawful  business  or  calling  is,  of  course,  sub- 
ject to  the  paramount  right  of  the  State  to  impose  such  restrictions 
and  regulations  as  the  protection  of  the  public  may  require.19  This 
power  must  be  exercised,  however,  in  conformity  with  the  consti- 
tutional requirement  that  the  restriction  imposed  must  operate 
equally  upon  all  persons  pursuing  or  seeking  to  pursue  such  calling 

or  -occupation,    under    the    same    circumstances It    is    well 

settled  that  if  a  statute  is  susceptible  of  two  constructions,  by  one  of 
which  it  would  be  unconstitutional  and  by  the  other  valid,  the  latter 
construction  should  be  adopted  rather  than  the  former." 

In  another  New  York  case20  it  was  held  that  the  Legislature  has 
the  right  to  regulate  the  business  of  soliciting  fire  insurance  and  to 
require  that  those  seeking  to  engage  therein  shall  first  secure  a 
license  from  the  state  authorities,  although  it  was  held  in  that  case 
that  the  statute  then  under  consideration  was  void  in  that  it  under- 
took to  limit  the  right  to  engage  in  the  business  of  fire  insurance 
agent  or  broker  to  such  persons  as  intended  to  carry  on  such  busi- 
ness as  their  principal  occupation  or  in  connection  with  a  real  estate 
business.21 


"Stern  v.  Metropolitan  Life  Ins.  Co.,  90  Misc.  129;  154  N.  Y.  Suppl.  283  (1915) 

18  169  App.  Div.  217;  154  N.   Y.   Suppl.  472    (1915). 

"Citing  People  ex  rel.     Armstrong  v.  Warden,  etc.,  183  N.  Y.,  223;  76  N.  E.  11; 

'wHauser  v.  North  British  &  M.  Ins.  Co.,  152  App.  Div.  91;  136  N.  Y.  Suppl.  1015 
(1912);  affd.,  206  N.  Y.  455;  100  N.  E.  52;  L.  R.  A.  (N.  S.)  1139;  Ann.  Cas. 
1914  B,  263  (1912). 

21C/.  Welch  v.  Maryland  Casualty  Co.,  147  Pac.  1046;  L.  R.  A.  1915  E.  708. 


CHAPTER  III 
WRITTEN   AND  ORAL  AUTHORITY  OF   BROKER 

§  13.     Form  of  Authorization  (p.  26) 

Add  to  footnote  1: 

Hancock  v.   Dodge,   85   Miss.  228    (1904).     See  Miss.   Code  of   1892, 
§4225,    par.    (C). 

A  verbal  modification  of  written  authority  to  sell  real  estate  does 
not  render  the  altered  authority  obnoxious  to  the  Statute  of  Frauds.1 
There  is,  however,  authority  that  where  a  broker  is  given  written 
authority  in  compliance  with  the  statute,  it  cannot  be  subsequently 
orally  modified  so  as  to  authorize  the  broker  to  sell  for  a  less  price 
than  stated  in  the  written  authorization.2 

§  13a.    Written  Authorization  Required  by  Statute  (p.  27) 

"Under  a  section  of  a  statute  of  frauds  declaring  that  'no  broker 
or  real  estate  agent  selling  or  exchanging  land  for  or  on  account  of 
the  owner  shall  be  entitled  to  any  commission  for  the  same,  or  ex- 
change any  real  estate  unless  the  authority  for  selling  or  exchanging 
such  land  is  in  writing,  signed  by  the  owner  or  his  authorized  agent, 
and  the  rate  of  commission  on  the  dollar  shall  have  been  stated,  in 
such  authority,'  it  was  determined  that,  in  the  absence  of  a  previous 
written  contract,  a  subsequent  written  promise  to  pay  the  commis- 
sion was  without  consideration  and  void.3  A  different  conclusion 
was  reached  in  the  case  of  Muir  v.  Kane,4  where,  in  construing  a 
statute  providing  that  any  agreement  authorizing  a  broker  to  sell  or 
purchase  real  property  for  a  commission  should  be  void  unless  the 
contract  or  some  note  or  memorandum  thereof  was  in  writing,  it  was 
decided  that  the  performance  of  the  services  under  an  oral  agree- 
ment, void  under  the  statute  of  frauds,  raised  a  moral  obligation 
which  was  a  sufficient  consideration  to  support  a  subsequent  writ- 
ten promise  to  pay  the  stipulated  compensation.  When  an  enactment 
expressly  declares  that  an  agreement  for  the  payment  of  a  commis- 

'Furse  v.  Lambert.  85  Neb.  739;   124  N.  W.   146   (1910). 

"Wellenger  v.  Crawford,   (Ind.   App.)   89  N.   E.   892   (1909). 

"Sorensen  v.  Smith,  65  Or.  78;  129  Pac.  757;  131  Pac.  1022;  51  L.  R.  A.  (X.  S.) 
612;  35  Ann.  Cas.  1127  (1913);  citing  Stout  v.  Humphrey,  69  N.  J.  L.  436;  55  All. 
281;  Leimbach  v.  Regner,  70  N.  J.  L.  603;  57  Atl.  138;  Bagnole  v.  Madden,  76  N.  J. 
L.  255;  69  Atl.  967. 

«55  Wash.   131;  104   Pac.  153;  19  Ann.  Cas.  1180;  26  L.  R.  A.   (N.  S.)   519. 

17 


18  POWERS,    AUTHORITY   AND    RIGHTS    OF    BROKER 

sion  for  securing  a  purchaser  of  land  is  void,  unless  it  is  in  writing 
and  signed  by  the  owner  of  the  real  property,  the  rule  is  well  estab- 
lished that,  in  the  absence  of  a  written  contract,  a  full  performance 
of  the  services  by  the  broker  does  not  take  the  case  out  of  the  statute 
of  frauds."5 

§  16.     New  Jersey;  Authority  to  Sell  or  Exchange  (p.  29) 

Add  to  footnote  14-' 

Heyman  v.  Stopper,  91  Atl.  (N.  J.)  1069  (1914);  affg.  85  N.  J. 
L.  128;  88  Atl.  946. 

§  17.     California;  Authority  to  Purchase  or  Sell   (p.  29) 

^Although  a— contract  .employing  -a  broker  is  required  to  be  in 
writing,  that  would  not  apply  to  an  agreement  by  a  principal  broker 
to  pay  an  assistant  a  specified  commission  for  services.6 

§  18.     Missouri;  Authority  to  Sell  (p.  29) 

The  Missouri  Act  of  March  28,  1903  (§  4634,  R.S.  1909),  for- 
bidding an  agent  in  certain  cities  to  sell  real  estate  unless  his 
authority  is  in  writing,  is  unconstitutional.7 

§  21.     Washington;  Authority  to  Sell  or  Purchase  (p.  31) 

Add  to  footnote  20: 

J.  E.  Houtchens  Co.  v.  Nichols,  142  Pac.  (Wash.)  674  (1914); 
Baylor  v.  Tolliver,  142  Pac.  (Wash.)  678  (1914);  Salin  v.  Roy,  142  Pac. 
(Wash.)  679  (1914);  Keith  v.  Smith,  46  Wash.  131;  89  Pac.  473;  13  Ann. 
Cas.  975. 

§  22a.     Oregon;   Authority  to  Sell  or  Purchase   (p.  31) 

In  Oregon,  an  agreement  authorizing  or  employing  an  agent 
or  broker  to  sell  or  purchase  real  estate  for  compensation  or  a  com- 
mission is  void  "unless  the  same,  or  some  note  or  memorandum 
thereof,  expressing  the  consideration,  be  in  writing  .  .  .  .  "8 


5Sorenson  v.  Smith,  65  Or.  78,  91;  129  Pac.  757;  131  Pac.  1022;  51  L.  R.  A. 
(N.  S.)  612;  35  Ann.  Cas.  1127  (1913);  citing  Myers  v.  Surryhne,  67  Cal.  657;  8 
Pac.  523;  Shanklin  v.  Hall,  100  Cal.  26;  34  Pac.  636;  McGeary  v.  Satchwell,  129  Cal. 
389;  62  Pac.  58;  Dolan  v.  O'Toole,  129  Cal.  488;  62  Pac.  92;  Beahler  v.  Clark,  32 
Ind.  App.  222;  68  N.  E.  613-  Price  v.  Walker,  43  Ind.  App.  519;  88  N.  E.  78;  King 
v.  Benson,  22  Mont.  256;  56  Pac.  280;  Marshall  v.  Trerise,  33  Mont.  28;  81  Pac.  400; 
Blair  v.  Austin,  71  Neb.  401;  98  N.  W.  1040;  Rodenbrook  v.  Gress,  74  Neb.  409;  104 
N.  W.  758;  Barney  v.  Lasbury,  76  Neb.  701;  107  N.  W.  989;  Gerard-Fillio  Co.  v. 
McNair,  68  Wash.  321;  123  Pac.  462. 

"Hagemen  v.  O'Brien,  24  Cal.  App.  270;   141  Pac.  33   (1914). 

7Printz  v.  Miller,  233  Mo.  47;  135  S.  W.  19  (1911);  Woolley  v.  Mears,  226  Mo. 
41;  125  S.  W.  1112;  136  Am.  St.  Rep.  637  (1910);  Cornet  v.  Cabrilliac,  228  Mo. 
212;  126  S.  W.  1030  (1910);  Klene  v.  Marjorie  Realty  Co.,  228  Mo.  607;  128  S.  W. 
980  (1910).  See  also  Young  v.  Ruhwedel,  119  Mo.  App.  240  (1906). 

8§808,  L.  O.  L. 


WRITTEN    AND    ORAL    AUTHORITY    OF    BROK1.K  1'J 

Under  that  statute  it  is  held  that  the  written  authorization  must 
state  the  compensation  to  be  paid  to  the  broker.9 

§  22b.     Arizona;  Authority  to  Sell  or  Purchase  (p.  31) 

"An  agreement  authorizing  or  employing  an  agent  or  broker  to 
purchase  or  sell  real  estate,  mines  or  other  property,  for  compen- 
sation or  a  commission,"  cannot  be  sued  upon  unless  in  writing.10 

Even  full  performance  by  the  broker  of  his  part  of  the  contract 
does  not  take  it  out  of  the  operation  of  the  statute  if  the  agreement 
is  oral  only.11 

§  22c.     Indiana;  Authority  to  Sell   (p.  31) 

In  Indiana  the  statute  provides:  "That  no  contract  for  the  pay- 
ment of  any  sum  of  money,  or  thing  of  value,  as  and  for  a  com- 
mission or  reward  for  the  finding  or  procuring,  by  one  person,  of 
a  purchaser  for  the  real  estate  of  another,  shall  be  valid,  unless  the 
same  shall  be  in  writing  signed  by  the  owner  of  such  real  estate  or 
his  legally  appointed  and  duly  qualified  representative."12 

Accordingly  it  is  held  that  there  can  be  no  recovery  on  an  oral 
contract  of  employment  to  act  as  agent  for  the  sale  of  real  estate.13 

But  where  the  services  have  been  rendered  under  an  oral  agree- 
ment, a  subsequent  written  agreement  executed  after  the  services 
are  rendered  is  enforceable.14 

"Section  1  of  the  act  of  March  5,  1901  (Acts  of  1901,  p.  144,  c. 
67),  and  sec.  74C3  of  Burns'  Revised  Statutes  of  1908,  provide  that 
no  contract  for  the  payment  of  money  as  a  commission  for  finding 
or  procuring  a  purchaser  for  real  estate  shall  be  valid  unless  the 
same  is  in  writing  and  signed  by  the  owner  of  the  real  estate.  This 
act  is  supplemental  to  the  statute  of  frauds  and  should  be  construed 
accordingly."15 

"Taggart  v.   Hunter,   152  Pac.    (Or.)   871    (1915). 

'"Civ.  Code,  Ariz.  3272,   1913. 

"McMurran  v.   Duncan,   155   Pac.   (Ariz.)    306   (1916).     See  also  Keith  v.   Smith, 

^§66293   Burns   1901,   Acts   1901,   p.   104. 

"Waddle  v.  Smith,  58  Ind.  App.  587;  108  N.  E.  537  (1914);  Lowe  v.  Mohler, 
(Ind.  App.)  105  N.  E.  934  (1914);  Zimmerman  v.  Zehender,  146  Ind.  466;  73  N.  E. 
920  (1905). 

14\VaddIe  v.   Smith,  supra. 

"Wellenger  v.  Crawford,  (Ind.  App.)   89  N.  E.  892   (1909). 


CHAPTER  IV 
BROKER'S  POWER  TO  SIGN  CONTRACT 

§  28.     Broker's  Authority  to  Sign  Contract  (p.  36) 

A  distinction  is  drawn,  too,  between  authority  to  sell  and  authority 
to  convey  land.  "Authority  to  convey  land  must  be  conferred  by 
an  instrument  of  equal  dignity  with  the  instrument  of  conveyance ; 
but  authority  to  sell  and  to  make  a  binding  contract  of  sale  may  be 
conferred  verbally."1 

t/The  powers  of  a  general  agent  extend  to  the  doing  of  all  acts 
connected  with  the  business  of  his  principal  and  his  authority  will 
be  deemed  to  include  all  usual  jneans  for  the  effective  performance 
of  his  duties. 

If  the  limitations  upon  the  agent's  authority  to  act  are  known  to 
the  person  with  whom  he  is  dealing,  or  if  the  transaction  is  such 
as  to  charge  him  with  the  duty  of  inquiring  into  the  extent  of  the 
agent's  authority  to  do  the  particular  act,  the  principal  will  be  pro- 
tected if  the  act  be  unauthorized,  or  in  clear  excess  of  the  agent's 
powers,  and  if  the  principal  be  an  innocent  actor  in  the  transaction.2 

If  a  person  dealing  with  an  agent  knows  that  he  is  acting  under 
a  circumscribed  and  limited  authority,  and  that  his  act  is  outside  of 
and  transcends  the  authority  conferred,  the  principal  is  not  bound, 
and  it  is  immaterial  whether  the  agent  is  a  general  or  a  special  one, 
because  a  principal  may  limit  the  authority  of  the  one  as  well  as 
that  of  the  other.3 

§  29.     Powers  Conferred  by  Instructions  to  Sell  Property 

(p.  37) 

Add  to  footnote  3: 

Fleming  v.  Hattan,  92  Kan.  948;   142  Pac.  971   (1914). 

Powers  Conferred  by  Appointment  as  Agent  (p.  38) 

is   perfectly   well   settled   and   generally   understood   that   the 
entire  duty  of  a  broker  employed  to  sell  or  to  assist  in  selling  property 

'Davis  v.  Spann,  122  S.  W.  495;  92  Ark.  213  (1909);  citing  Forrester-Duncan 
Land  Co.  v.  Evatt,  119  S.  W.  282;  McCurry  v.  Hawkins,  83  Ark.  202;  103  S.  W.  600. 

'Cullinan  v.  Bowker    180     N.  Y.  93;   72  N.   E.  911    (1904),  by  a  divided  court. 

"Quintan  v.  Providence  Washington  Ins.  Co.,  133  N.  Y.  356;  31  N.  E.  31;  28 
Am.  St.  Rep.  645  (1892). 

20 


BROKER'S  POWER  TO  SIGN  CONTRACT  21 

is  t<>  search  out  a  purchaser  and  to  act  as  the  intermediary  to  bring 
the  seller  jmd  the  purchaser  toother./  -la^tfie  absence  of  a  special 
and  well-defined  authority  it  is  no  part  of  a  broker's  duty  to  actually 
make  the_sale  in  behalf  of  the  owner."  It  is  immaterial  that  the 
broker  may  have  represented  to  the  purchaser  that  he  had  authority 
to  contract  in  behalf  of  the  seller,  for  one  cannot  make  himself  an 
agent  of  another  by  merely  asserting  his  agency.4 

"It  has  been  so  often  held  that  it  must  be  regarded  as  settled  in 
this  state  that  authority  to  a  broker  to  procure  a  purchaser  is  not 
authority  to  enter  into  an  enforceable  contract  of  sale."5 

It  has  been  held  that  "an  agency  to  sell  land  carries  with  it  no 
implied  authority  to  bind  the  owner  to  furnish  an  abstract  of  title."8 

In  Watkins  v.  Thomas,7  the  court  inquires  whether  it  is  possible 
that  a  broker's  authority  to  sell  contemplates  that  he  will  find  anyone 
who  would  be  willing  to  buy  without  first  learning  that  the  vendor 
had  title,  "and  how  could  one  know  that  he  had  such  title  unless  he 
had  an  abstract  to  so  show?  The  court  takes  judicial  notice  of  the 
custom  in  such  cases  that  the  authority  to  sell  carries  with  it  the 
obligation  to  furnish  such  abstract." 

Add  footnote  9a  at  end  of  §  30  (p.  88): 

Record  v.  Littlcfield,  218  Mass.  483;   106  N.  E.   142   (1914). 

§  37.     Rule  in  Other  States  (p.  42) 

In  Missouri,  agent's  authority  to  contract  must  be  in  writing.8 

§    38.      When    Broker    Has   Authority   to   Sign    Contract 

(p.  42) 

Add  to  footnote  28: 

Keim    v.    O'Reilly,    54    N.    J.    Eq.    418;    34    All.    1073;    Brandrop    v. 
Britten,    11    N.    D.   376;   92   N.   W.   453;   Rhode   v.   Gallat,   70   So.    (Fla.)  • 
471    (1915). 

§    41.      Dissenting    Opinions    as    to    Incidental    Power    to 
Contract  (p.  44) 

\y    IjHs  held  that  where  a  broker  is  instructed  "to  go  ahead  and  close 
the  deal,"  he  can  sign  the  contract  of  sale   for  his  principal.9 


4Stone  v.  U.  S.  Title  Guaranty  &  Indemnity  Co.,  159  App.  Div.  679;  144  N.  Y. 
Suppl.  849  (1913). 

sLawson  v.  King,  56  Wash.  15;  104  Pac.  1118  (1909);  citing  Gartens  v.  McReavy, 
1  Wash.  359;  25  Pac.  471;  Armstrong  v.  Oakley,  23  Wash.  122;  62  Pac.  499;  Foss 
Inv.  Co.  v.  Ater,  49  Wash.  446;  95  Pac.  1017:  Hardinger  v.  Columbia,  50  Wash.  405; 
97  Pac.  445;  Hutchins  v.  Wertheimer,  51  Wash.  539;  99  Pac.  577. 

•Anderson  v.   Howard,   155   N.  W.    (Iowa)  261   (1915). 

7  141  Mo.  App.  263:  124  S.  W.  1063   (1909). 

"Young  v.  Ruhwedel.  119  Mo.  App.  239  (1906). 

•Furse  v.  Lambert,  85  Neb.  739;  124  N.  W.  146   (1910). 


CHAPTER  V 
BROKER  ACTING  FOR  BOTH  PARTIES 

§   49.      Acting   for   Both   Parties   a   Breach   of   Contract 

(p.  49) 

Add  to  footnote  4  (p.  50)  : 

King  v.  Reed,  24  Cal.  App.  229;  141  Pac.  41  (1914);  Jacobs  v. 
Beyer,  141  App.  Div.  49;  125  N.  Y.  Suppl.  597  (1910);  citing  Murray 
v.  Beard,  102  N.  Y.  505;  7  N.  E.  553;  Empire  St.  Ins.  Co.  v.  Am.  Cent. 
Ins.  Co.,  138  N.  Y.  446;  34  N.  E.  200;  Everhart  v.  Searle,  71  Penn  St. 
256;  Farnsworth  v.  Hemmer,  1  Allen  (Mass.)  494;  79  Am.  Dec.  756; 
Walker  v.  Osgood,  98  Mass.  348;  93  Am.  Dec.  168;  Rice  v.  Wood,  113 
Mass.  133;  18  Am.  Rep.  459;  Raisin  v.  Clark,  41  Md.  158;  20  Am.  Rep. 
66;  Bollman  v.  Loomis,  41  Conn.  581. 

§  51.    The  Rule  Applies  to  Exchange  of  Property  (p.  50) 

Where  in  an  exchange,  the  broker  has  no  discretion  in  respect 
of  any  terms  or  details  of  the  exchange,  yet  where  the  principal  has 
the  right  to  expect  from  the  broker  the  benefit  of  his  knowledge  or 
any  information  that  the  broker  may  possess  concerning  the  prop- 
erty to  be  taken  in  exchange  by  the  principal,  as  for  example,  the 
broker's  knowledge  concerning  the  value  of  such  property,*^  secret 
agreement  by  the  broker  to  accept  commissions  from  the  other  party, 
to  the  exchange  would  bar  the  broker  of  his  right  to  commissions 
from  his  principal.  Such  an  instance  is  said  to  differ  from  the 
cases  where  the  courts  have  held  that  a  broker  may  receive  double 
commissions  where  it  appears  that  he  was  solely  employed  to  find 
a  purchaser  upon  terms  fixed  by  the  employer,  or  where  it  was 
understood  that  the  broker  had  nothing  else  to  do  but  to  submit  a 
purchaser  to  the  principal.1 

""The  reason  for  this  rule  is  obvious.  In  such  cases  the  broker 
cannot  possibly  be  guilty  of  bad  faith  towards  the  employer,  who 
either  has  fixed  all  the  terms  and  conditions  under  which  he  will  sell 
his  property  or  else  has  stipulated  personally  to  attend  to  all  nego- 
tiations. There  is  nothing  for  the  broker  to  do  in  such  cases  but  to 
procure  a  party  who  is  ready  and  willing  to  buy  the  property  upon 
the  terms  laid  down  by  the  employer."2 

"The  plaintiff  had  a  lawful  right,  however,  to  make  a  contract 

Nichols   v.    Greenstreet.    71    Misc.    196;    130    N.    Y.    Suppl.    843    (1911);    affd.,    146 
App.   Div.  940;   131   N.  Y.   Suppl.   1131. 
'Nichols  v.   Greenstreet,  supra. 

22 


BROKER    ACTING    Ko|;    MOTH     PASTIES  23 

for  commissions  from  both  parties,  and  he  was  under  no  legal  or 
moral  obligation  to  disclose  his  contract  with  one  to  the  other.  He 
was  given  no  discretion  in  the  matter,  but  was  simply  a  broker  to 
bring  the  parties  together.  They  made  their  own  contract  after 
they  were  brought  together."3 

It  has  been  intimated  that  if  a  custom  exists  in  any  locality  that 
brokers  charge  both  parties  commissions  where  an  exchange  is  made, 
and  the  parties  knew  of  the  existence  of  the  custom,  the  broker 
could  recover  from  both  sides.4 

Mut  this  is  in  .reality  saying  nothing  more  than  that  if  both  parties 
knew  that  the  broker  was  to  receive  pay  from  both,  he  is  not  pre- 
cluded from  recovering.5 

Add  to  footnote  6  (p.  51)  : 

Welch  v.  Garrett,  186  111.  App.  191  (1914);  Hoffhtnes  v.  Thorson, 
92  Kan.  605;  141  Pac.  253  (1914);  Jacobs  v.  Beyer,  141  App.  Div.  49: 
125  N.  Y.  Suppl.  597  (1910).  See  also  §  180. 

§   52.      Acting  for  Both   Parties   with  Their  Knowledge 

(p.  51) 

Add  to  footnote  11: 

Ramey  v.  Sturgeon,  86  S.  E.  (Ga.)  660  (1915);  Madden  v.  Davis, 
192  111.  App.  575  (1915). 

Defendant  employed  as  broker  by  two  principals  to  procure  an 
exchange  of  their  real  estate  agreed  to  give  plaintiff  one-half  of  the 
commissions.  Plaintiff  at  the  inception  of  the  negotiations  was  an 
accredited  agent  of  one  of  the  principals,  but  was  never  an  agent 
of  the  other  principal,  and  never  informed  him  of  the  agreement  to 
divide  commissions.  Plaintiff's  principal  was  informed  of,  and  con- 
sented to,  the  agreement.  Held,  that  the  agreement  between  the 
brokers  was  enforceable,  for  the  transaction  did  not  contravene  any 
rule  regulating  the  duties  of  an  agent  to  his  principal,  and  both 
principals  contracting  to  pay  commissions  to  defendant  on  consum- 
mation of  the  exchange,  which  was  done.6 

§  54.     Broker  Vested  with   No  Discretion  May  Act  for 
Both  Parties  (p.  52) 

,1  dd  to  footnote  17  (p.  58) : 

American  Security  &  Investment  Co.  v.  Penney,  129  Minn.  369; 
152  N.  W.  771  (1915). 


"Silberkraus  v.  Winnie,    158  App.    Div.   50;    142  N.   Y.   Suppl.  887    (1913). 
4Ramey  v    Sturgeon,  86  S.  E.   (Ga.)   660   (1915).     And  see  Mecum  v.  Moyer,  166 
App.  Div.  793,  805;  152  N.  Y.  Suppl.  385   (1915). 
8See    §    220. 
"Head  note  in  Hladik  v.  Allen,  26  Cal..  App.  509;  147  Pac.  474  (1915). 


24  POWERS,    AUTHORITY   AND   RIGHTS    OF    BROKER 

§  55.    Compensation  of  Broker  Without  Discretion  (p.  53) 

Add  to  footnote  19: 

King  v.  Reed,  24  Cal.  App.  229;  141  Pac.  41  (1914);  Langford  v. 
Issenhuth.  28  S.  D.  451;  134  N.  W.  889;  Jordan  v.  Anderson,  155  N.  W. 
(S.  D.)  769  (1915). 

§   58.      How  Question  of  Double  Employment   Is   Raised 

(P-  56) 

Add  to  footnote  23  (p.  56)  : 

Jacobs  v.  Beyer,  141  App.  Div.  49;   125  N.  Y.  Suppl.  597   (1910). 

Add  to  footnote  24  (p.  57): 

See  also  Nichols  v.  Greenstreet,  71  Misc.  196;  130  N.  Y.  Suppl.  843 
(1911);  affd.  146  App.  Div.  940;  131  N.  Y.  Suppl.  1131. 

On  page  57,  at  end  of  §  58,  add  the  following  paragraphs: 

But  although  the  defense  is  not  pleaded,  the  objection  is  waived 
if  the  broker  permits  evidence  with  regard  to  the  double  employment 
to  be  given  without  objection.7 

In  any  event,  the  question  cannot  be  raised  for  the  first  time  on 
appeal.8 

Although  there  is  conflict,  as  noted,  concerning  the  question 
whether  the  principal  may,  without  pleading  it  as  a  defense,  avail 
himself  of  the  fact  that  the  broker  secretly  agreed  for  compensa- 
tion from  the  other  party,  it  is  said  to  be  incumbent  upon  the  broker, 
where  he  has  a  secret  agreement  for  double  commissions,  to  estab- 
lish that  his  agreement  for  double  commissions  is  not  inconsistent 
with  the  terms  of  his  original  employment.9 

7Jacobs  v.  Beyer,  141  App.  Div.  49;  125  N.  Y.  Suppl.  597  (1910). 
"Rees  v.    Gair,    144  App.    Div.   294;    129   N.   Y.    Suppl.   213    (1911). 
•Nichols    v.    Greenstreet.    71    Misc.    196,    130    N.    Y.    Suppl.    843    (1911);    affd.,    146 
App.  Div.  940;   131   N.  Y.  Suppl.   1131. 


CHAPTER  VI 
BROKER'S  RIGHT  TO  INTEREST  IN  PROFITS 

§  62.     Agent  May  Not  Also  Act  as  Principal  (p.  61) 

/^As  a  general  rule,  where  oil-  '  by  an  owner  of  prop- 

erty to  sell  it  as  jns_agent,  he  is  not  authorized  to  sell  it  to  himself 
alone,  .or  together  with  others,  without  the  consent  of  the  owner."1 
A  person  cannot  be  both  broker  and  purchaser. >^?Cs  soon  _as  he 
becomes  a  purchaser  or  principal,  his  agency  ceases,  and  his  legal 
authority  to  act  as  a  broker,  ipso  facto,  becomes  inconsistent  and 
invalid!  He  cannot  "legally  act  in  such  dual  relations,  however  great 
his  agility  to  turn  a  somersault."2 

"The  doctrine  of  the  law  that  forbids  an  agent  to  buy  from  or 
sell  to  himself  is  not  necessarily  based  on  the  idea  that  such  deal  in 
dirt  is  (to  speak  colloquially)  a  'dirty'  deal;  that  is  to  say,  resulted 
in  an  injury  to  or  a  fraud  upon  him.  But  it  is  rather  based  on  the 
idea  of  closing  the  door  to  the  temptation  to  commit  fraud.  It  tends 
to  keep  the  agent's  eye  single  and  clear  to  the  rights  and  welfare  of 
his  principal.  To  allow  one  acting  in  the  fiduciary  relation  of  agent 
to  buy  from  or  sell  to  himself  is  a  solecism  in  the  realm  of  law,  for 
the  moral  stamina  of  the  average  man  is  inadequate  to  preserving 
a  fine  glow  of  fidelity  to  his  trust  and  confidential  relation  in  such 
transaction,  and  the  interdiction  is  enforced  with  a  strong  hand  in 
courts  of  justice."3 

§  63.     Agent  May  Not  Make  Secret  Profits  (p.  62) 

Where  a  real  estate  broker  having  a  contract  entitling  him  to  half 
of  a  $500  commission  to  be  received  by  the  broker  of  a  vendor  of 
lands,  organized  a  corporation  to  purchase  the  lands  and  falsely 
represented  to  the  incorporators  that  the  lands  could  be  purchased 
for  $10,000  subject  to  a  mortgage  of  $4,500,  when  in  fact  the  pur- 
chase price  was  $9,000  and  he  only  paid  $4,500  in  cash  on  the  lands, 
which  was  the  amount  contributed  by  his  fellow-incorporators,  and 
had  stock  issued  to  himself  for  the  difference  between  the  real  and 


Syllabus  by  the  court  in  Mitchell  v.  Gifford,  133  Ga.  823;  67  S.  E.  197  (1910). 

'McLaughlin   v.   Campbell,    (N.  J.   Ct.   of   E.  &  A.)    74  All.   530    (1909). 

"Meek  v.  Hurst,  223  Mo.  688;  122  S.  W.  1022  (1909);  citing  Montgomery  v. 
Hundley,  205  Mo.,  loc.  cit.  148;  103  S.  W.  527;  11  L.  R.  A.  (N.  S.)  122  et  seq.; 
Moore  v.  Mandelbaum,  8  Mich.  434;  Grumley  v.  Webb.  44  Mo.  444;  100  Am.  Dec. 
304;  Evans  v.  Evans,  196  Mo.,  loc.  cit.  23;  93  S.  W.  969. 

25 


26  POWERS,    AUTHORITY   AND   RIGHTS    OF    BROKER 

the  represented  price,  the  transaction  comes  within  the  rule  pro- 
hibiting a  broker  from  making  any  secret  profit  out  of  his  prin- 
cipal.4 

§  66.     Act  of  Agent  in  His  Own  Interest  Presumed  In- 
jurious (p.  64) 

Where  a  person  solicits  another  to  appoint  him  his  agent,  there 
is  an  implied  representation  that  the  former  is  legally  qualified  to. 
be  such  agent,  and  if  the  agent  has  a  personal  interest  in  the  trans- 
action7~not  disclos*"*  *n  h;^  principal,  he  cannot  be  said  to  be  legally 
qualified  to  act  as  such  agent.5 

67.     Act  of  Agent  in  His  Own  Interest  Voidable,  but 
May  Be  Ratified  (p.  65) 

"The_principle  that  a  person  occupying  a  position  of  agent  to 
purchase  may  not  sell  his  own  property  to  his  principal  is  so  ele- 
mentary that  it  need  only  be  stated.  It  must  be  quite  as  elementary 
and  true  that  if  one  by  misrepresentation  or  suppression  of  facts 
when  he  ought  to  speak  induces  another  ignorantly  to  make  a  con- 
tract appointing  the  first  his  agent  to  buy  and  conferring  upon  him 
discretionary  power  to  purchase  his  own  property,  the  contract  is 
voidable  and  even  if  executed  may  be  rescinded  and  the  money 
recovered  back  on  restoration  of  what  has  been  received."6 

§  68.     Agent  May  Be  Personally  Interested  with  Consent 
of  Principal  (p.  65) 

Add  to  footnote  22  (p  66)  : 

Sonnesyn   v.   Hawbaker,   148   N.   W.    (Minn.)    476    (1914). 

§  69a.     When  Minimum  Price  Is  Fixed   (p.  67) 

. — -  Whjle_jan_ag£jat--e4Hfik)ye4--to  sell  property-  -may  not -sell_tfX- him- 
self, it  has  been  suggested  that  where  the  agent  is  authorized  to 
sell  the  property  at  a  minimum  price  to  the  principal,  the  agent 
to_^he_ entitled^  to  whatever  is  obtained  for  the  property  above 
that  price,  the  agent  may  properly  purchase  the  property  himself.7 
It  is  urged  that  in  such  case  the  minimum  price  fixed  belongs  to  the 
principal.  All  above  the  minimum  price  belongs  to  the  agent, 
and  therefore  the  agent's  diligence  in  securing  the  best  price  ob- 

4Travis  v.  Travis,   140  App.   Div.   191;   124  N.  Y.   Suppl.   1021    (1910). 
BHeckscher  v.  Edenborn,  203  N.  Y.  210;  96  N.  E.  441   (1911). 
"Heckscher  v.  Edenborn,  203  N.  Y.  210  at  p.  222;  96  N.  E.  441   (1911). 
'See  Hutton  v.  Sherrard,  150  N.  W.   (Mich.)    135. 


BROKKK'S  KK;HT  TO   INTKKKST   IN    I-KOHTS  27 

tainablc  would  be  no  benefit  to  the  principal  beyond  the  minimum 
price.  Whether  the  property  sells  for  $100  or  $1,000  in  excess  of 
the  minimum  price,  the  result  is  the  same  to  the  principal.  It 
might  also  be  added  that  if  the  agent  prefers  to  take  his  chances 
and  accept  his  pay  by  taking  the  property  and  personally  turning 
over  to  the  principal  the  minimum  price,  the  choice  is  with  the  agent. 
Such  a  situation,  however,  must  not  be  confused  with  cases  where 
the  owner  fixes  a  minimum  selling  price,  without  any  agreement  that 
the  agent  shall  have  as  compensation  all  in  excess  of  the  minimum 
price.8 

§  70.      Broker  May  Not  Lawfully  Combine  with  Others 
to  Secure  Secret  Profits  (p.  67) 

S'  When  an  agent  secretly  becomes  a  purchaser  for  himself  from 
his  principal,  the  vendor,  his  purchase  is  void  at  the  election  of  the 
vendor,  on  discovery  of  the  facts,  and  if  the  buyer  joins  the  agent  in 
the  scheme,  knowing  the  agent's  relations  to  the  transaction,  the 
buyer's  purchase  is  equally  voidable.9 

8See  §§  215-217 

"Waterbury   v. '  Barry,    145   App.    Div.   773,   782;    130   N.   Y.   Suppl.   517    (1911). 


CHAPTER  VII 
GENERAL  AUTHORITY   OF   BROKER 

§  74.     Broker's  Power  to  Employ  Other  Brokers  (p.  70) 

Add  to  footnote  5  (p.  71)  : 

Mitchell  v.  Catlin  Co.,  71  Misc.  450;  128  N.  Y.  Suppl.  692  (1911); 
Simms  v.  St.  John,  105  Ark.  680;  152  S.  W.  284;  43  L.  R.  A.  (N.  S.) 
796;  McCoombs  v.  Moss,  181  S.  \V.  (Ark.)  907  (1916). 

On  page  12,  at  end  of  second  paragraph,  add: 

/^"Pla^pH  jr|  ffof  ^iaiyla^-n^  a  broker  is  a  familiar  form  of  expres- 
sion used  to  indicate  the  appointment  of  an  agent  for  the  sale  of 
property.1 

On  page  Ik,  after  "from  the  former1-"  add  the  folio-icing  three 
paragraphs: 

One  broker  cannot  recover  from  another  broker  on  a  contract 
to  divide  commissions  on  the  sale  of  real  property,  unless  the  com- 
missions have  been  actually  received  by  the  broker  whom  it  is  sought 
to  charge  with  liability.2 

Where  in  an  action  by  one  real  estate  broker  against  another 
to  recover  an  alleged  agreed  one-third  of  the  commission  received 
by  defendant  in  the  event  of  the  sale,  lease,  or  exchange  of  a  certain 
parcel  of  real  estate,  it  is  undisputed  that  a  lease  of  said  parcel  and 
another  parcel  was  effected  by  defendant  who  received  a  com- 
mission, plaintiff  is  not  entitled  to  one-third  of  the  entire  commis- 
sion, but  at  most  to  one-third  of  the  commission  on  the  parcel  cov- 
ered by  the  agreement,  and  a  verdict  in  favor  of  plaintiff  for  the 
full  amount  of  one-third  of  the  entire  commission  was  held  clearly 
against  the  weight  of  evidence  and  the  judgment  entered  thereon  was 
reversed  and  a  new  trial  granted.3 

n  such  case,  the  remedy  is  not  the  equitable  bill  for  discovery, 
n  agreement  between  one  real  estate  agent  with  whom  land  is 
listed  for  sale  to  divide  the  profits  with  another  agent  if  the  latter 
procures  a  purchaser  docs  not  create  a  partnership  between  them. 


L-^n 


'Raeder  v.   Butler,   19  Pa.   Super.   Ct.   604   (1902). 

2White  v.    Douglas  Robinson,  Charles  S.   Brown   Co.,   153   App.   Div.   776;    138   N. 
Y.    Suppl.    992    (1912). 

"Kraus  v.  Cammann,  95  Misc.  262;  158  N.  Y.  Suppl.  877  (1916). 

28 


GENERAL   AUTHORITY    OF    BP.oKl.i;  29 

Equity    is   without   jurisdiction    to   compel    an    accounting   since   the 
remedy  at  law  is  adequate.4 

§  75a.     Liability  of  Renting  Agent  for  Violation  of  Labor 

Law  (p.  76) 

One  who  acts  as  renting  agent  for  the  owner  of  real  estate,  and 
also  has  control  of  the  property  may  be  convicted  of  a  violation  of 
Section  1275  of  the  Xew  York  IVnal  Law,  making  it  a  misdemeanor 
to  fail  to  comply  with  the  provisions  of  the  Labor  Law,  in  that  he 
did  not  light  properly  a  stairway  leading  to  a  bake  shop  in  the  cellar 
of  a  tenement  house  as  required  by  the  Labor  Law,  a  provision  of 
which  reads  that  ''The  term  'owner'  as  used  in  this  article  shall  be 
construed  to  mean  the  owner  or  owners  of  the  freehold  of  the 
premises,  or  the  lessee  or  joint  lessees  of  the  whole  thereof,  or  his, 
her.  or  their  agent  in  charge  of  the  property."  The  court  said : 
"There  was  evidence  that  the  agent  performed  acts  of  control  over 
the  property.  We  think  the  evidence  was  sufficient  to  show  that  the 
defendant  was  more  than  a  mere  renting  agent,  and  that  he  was  the 
agent  in  charge  of  the  property.  Such  an  agent  is  amenable  to 
prosecution  under  the  statute.  The  question  of  intent  in  the  viola- 
tion of  the  statute  is  immaterial."  But  the  conviction  was  reversed 
because  of  insufficient  evidence  that  the  place  was  not  properly  or 
adequately  lighted.5 

It  has  been  held  that  an  agent  in  charge  of  property  with  author- 
ity to  collect  rents  and  negotiate  for  and  make  minor  repairs,  but 
without  authority  to  execute  leases  or  to  make  such  repairs  or  altera- 
tions as  would  be  necessary  to  make  the  building  conform  to  the 
requirements  of  Section  79b  of  the  Labor  Law,  providing  in  part 
that  no  factory  shall  be  conducted  in  any  building  if  over  two  stories 
in  height  unless  it  be  provided  on  each  floor  with  at  least  two  means 
of  exit  or  escape  from  fire,  is  an  "agent  in  charge  of  the  property," 
within  the  meaning  of  said  section,  and  may  be  punished  for  the 
non-observance  of  its  provisions  under  Section  94  of  the  Labor  I.a\v 
and  Section  1275  of  the  Penal  Law.6 

The  court  said :  "I  do  not  think  that  the  fact  that  an  agent  for  a 
building,  like  the  defendant  in  the  case  at  bar,  may  not  have  author- 
ity to  make  the  required  alterations  is  by  any  means  decisive  of  the 
question.  Section  79b  does  not  provide  that  every  tenant-factory 
shall  be  equipped  with  the  two  described  means  of  exit  on  each  floor. 


McVay,    193    III.    App.    417    (1914). 
Pullman,    166  App.   Kv.   99;    151    N.       .      uppl. 
•People  v.  Pease  &  Elliman,  Inc.,  173  App.  Div.  752,  758  (1916). 


"People  v.  Pullman,  166  App.  Div.  99;   151   N.  Y.   Suppl.  741    (1915). 


30  POWERS,    AUTHORITY    AND    RIGHTS    OP    BROKER 

It  provides  only  that  no  factory  shall  be  conducted  in  any  building 
theretofore  erected  unless  the  two  means  of  exit  shall  be  provided. 
It  is  not  the  failure  to  equip  the  building  in  the  prescribed  manner 
that  violates  the  law,  it  is  the  maintenance  of  a  factory  in  a  building 
not  properly  equipped,  and  the  violation  can  be  terminated  either  by 
altering  the  building  or  by  discontinuing  the  factory.  Under  Section 
94  both  the  actual  owner  and  the  respective  tenants  are  made  respon- 
sible if  a  factory  is  conducted  in  a  building  in  violation  of  Section 
79b,  and  I  think  it  is  clear  that  the  agent  in  charge  of  the  building 
should  likewise  be  held  responsible. 

"The  agent  knows  whether  the  building  complies  with  the  require- 
ments of  Section  79b.  He  also  knows  whether  the  leases  permit  the 
tenants  to  conduct  factories  in  the  building.  If  factories  are  per- 
mitted in  the  leases  in  a  building  not  conforming  to  the  law  there  is 
no  reason  why  the  agent  should  not  be  held  responsible.  If  a  tenant 
conducts  a  factory  without  permission  to  do  so  in  his  lease  in  viola- 
tion of  the  law  the  agent  is  sure  to  find  it  out  and  it  is  his  duty  to 
see  that  the  violation  is  stopped.  If  he  continues  to  act  as  agent  for 
the  building,  knowing  that  the  law  is  being  violated  there,  he  should 
also  be  held  responsible  for  the  violation.  His  liability  is  based  upon 
the  existing  condition  of  affairs  and  not  upon  the  owner's  failure  to 
make  alterations." 

Two  of  the  five  judges  of  the  Appellate  Division  dissented,  saying 
in  part:  "It  seems  to  me  that  to  hold,  under  these  circumstances, 
that  the  defendant  was  an  'agent  in  charge  of  the  property'  is  to 
strain  the  language  of  the  statute  beyond  all  reason.  An  agent  'in 
charge  of  property  must  mean  an  agent  who  has  some  authority 
and  responsibility  regarding  it,  and  when  an  agent  is  sought  to  be 
held  criminally  liable  for  having  failed  to  do  something  regarding 
the  property,  it  should  at  least  appear  that  the  terms  of  his  agency 
were  such  that  he  had  the  power  to  do  that  for  the  non-doing  of 
which  he  is  sought  to  be  punished  as  a  criminal.  It  is  no  answer 
to  say  that  he  ought  to  insist  upon  having  such  power,  for  the  terms 
of  an  agency  are  in  general,  to  be  determined  by  the  principal.  The 
act  is  doubtless  a  highly  beneficial  one  which  should  be  strictly  en- 
forced, but  not  by  prosecuting  as  violators  persons  who  had  no  power 
of  compliance,  and  are,  therefore,  innocent  of  wrongdoing." 

§  78.     Insurance  Brokers  (p.  77) 

See  also  §  11  as  to  license  requirements. 

An  insurance  broker  may  occupy  such  relations  to  an  insurance 


GENERAL,   AUTHORITY   OF    BIMKKK  31 

company  as  to  be  its  agent  in  many  ways,  including  the  receipt  of 
premium  moneys.7 

"It  is  settled  beyond  controversy  in  this  state  that  a  broker  who 
is  employed  to  secure  insurance  is  the  agent  for  the  insured  and  not 
for  the  company.  "s 

"It  is  equally  well  settled  that  a  broker  or  agent  employed  merely 
for  the  purpose  of  procuring  insurance  has  no  implied  authority  to 
cancel  or  to  accept  an  operative  notice  of  cancellation."8 

Brokers  are  liable  where  they  undertake  to  procure  insurance 
and  utterly  neglect  to  obtain  any  insurance,  or  fail  to  carry  out  mate- 
rial provisions  of  their  agreement,  and  a  loss  results.  In  such  a  case, 
they  are  said  to  be  liable  for  as  much  as  would  have  been  covered 
by  the  insurance  which  they  agreed  to  procure.10 

A  fire  insurance  agent  employed  to  negotiate  a  policy  who,  having 
knowledge  that  his  principal's  property  is  already  insured,  procures 
and  delivers  to  his  principal  another  policy  containing  a  clause  that 
it  is  void  in  case  of  other  insurance  not  expressly  permitted  in  the 
new  policy,  is  guilty  of  negligence  and  liable  to  his  principal,  for  the 
resulting  loss.  The  failure  of  the  principal  to  examine  the  policy 
delivered  by  his  agent  and  discover  the  defect  does  not  exonerate 
the  agent,  or  constitute  a  waiver  of  his  claim,  for  waiver  can  only 
exist  where  there  is  knowledge  on  the  part  of  the  person  making  the 
waiver.11 

"It  seems  to  be  settled  law  that  if  an  agent  is  personally  inter- 
ested in  the  property  insured,  no  policy  issued  by  him  thereon,  or 
act  done  by  him  in  connection  therewith,  binds  the  insurance  com- 
pany, unless  known  and  assented  to  by  it."12 

This  is  so  because  the  law  does  not  permit  an  agent  to  bind  two 

7Smith    Lumber    Co.    v.    Colonial    Assurance    Co.,    172    App.    Div.    149;    158    N.    V 

UPPflCiting   Northrup   v.   Piza,  43   App.   Div.   284;   60   N.   Y.   Suppl.  363-   affd    without 
opinion,  167  N.  Y.  578;  60  N.  E.  1117;  Morris  v.  Home  Ins.  Co.,  78  Misc.  Rep.  303; 

59  »*on/donTPlExto4n-Hall  Brokerage  &  V.  Agency,  80  Misc  369  371  ;  142  N.  Y 
Suppl  548  (1913);  Tacoma  L.  &.  T.  Co.  v.  Firemen's  Fund  Ins.  Co.,  151  Pac.  9 
(Wash.  1915);  Richards  on  Insurance  (3rd  ed.),  388,  389 

'«Rezac   v.   Zima,  96  Kan.   752;    153  Pac.  500   (1915);   Milliken  v    Woodward    64  1 
J.    L.   444;   45    Atl.    796;    Lindsay   v.   Pettigrew     5    S.    D     500;    59   N     W.    726;    Sawyer 
v.   Mavhew,   51    Me.  398;   Diamond  v.    Duncan      Tex    Civ    App.)   138  S    W     42;  ;*;   Mai- 
lerv  v    Frve    21   App    U    C.   105;   Criswell  v.   Riley,   5   Ind.   App.  496;   30   N.    K 
32   X     E    814-   Backus  v.   Acmes/79   Minn.   145;   81   N.  W.   766;   Brick  Co.   v.   Hogsett. 
73   Mo.   App.   43-';    Note,   38  L.   R.   A.    (N.   S.)    631. 

"Israelson  v.   Williams,   166  App.    Div.   2Sj    151    XV   Suppl.  .679   (1915). 

*Dull   v     Roval    Ins.    Co.,    159    Mich.    671;    124    N.    \N  .    533;    16    Del.   Lex 
(1910);    citing    T  May    on    Insurance.    §    125;    3    Cooley  s    Briefs   on    Insurance,    2  529; 
22  Cyc.   1435J   Zimmerman   v.   Ins.   Co.,   110   Mich.   399;   68   N.   W.   215;   33   L.   R.   A. 


,  . 

Co.'  v.  Cooper,  6  Colo.  App.  25;  40  Pac.   147. 


32  POWERS,    AUTHORITY    AND   RIGHTS    OF    BROKER 

parties  having  opposite  interests,  nor  to  be  a  party  on  the  one  side 
and  the  agent  of  the  opposite  party  on  the  other,  unless  both  parties 
know  of  the  dual  relation  and  assent  to  it.13 

Add  to  footnote  23  (p.  77)  : 

Singer    v.    National    Fire    Insurance    Co.,    154    App.    Div.    783;    139 
N.   Y.    Suppl.    375    (1913). 

§  78a.     Compensation  for  Appraisals  and  Giving  Expert 
Testimony  (p.  78) 

Brokers  are  often  called  as  witnesses  in  trials  to  give  testimony 
as  to  values  of  property,  situation,  character,  and  surroundings  of 
property,  etc.,  and  the  question  arises  whether  the  broker  is  in  such 
cases  entitled  to  more  than  the  ordinary  witness  fees.  If  the  broker's 
services  consist  entirely  of  testifying  at  the  trial  to  facts  within  his 
knowledge,  then  no  recovery  may  be  had  by  him  in  the  absence  of 
an  express  promise  beyond  the  ordinary  witness  fees.  But  this  rule 
does  not  go  to  the  extent  of  obliging  a  person  to  give  technical  ex- 
pert testimony  without  reasonable  compensation.  The  law  regards 
such  knowledge  as  the  capital  of  the  person  possessing  it  which  a 
litigant  has  no  right  to  utilize  without  paying  for  it.  But  where 
one  voluntarily  testifies  on  request  without  insisting  on  compensation 
as  a  condition  of  giving  his  evidence,  he  could  hardly  afterward  hold 
the  person  on  whose  behalf  he  testified,  to  more  than  the  ordinary 
witness  fees.  Where,  however,  the  services  for  which  compensation 
is  claimed  are  not  for  the  giving  of  the  testimony  but  for  the  time 
and  labor  spent  in  making  the  necessary  investigation  in  order  to 
qualify  him  as  an  expert  witness,  such  time  and  labor  are  services 
rendered  outside  and  beyond  services  as  a  witness,  and  "it  has  been 
repeatedly  held  that  professional  persons  cannot  be  required  to  make 
any  examination  or  preliminary  preparation  in  order  to  better  qualify 
themselves  as  experts,  and  that  when,  on  request,  such  services  are 
performed  for  another,  extra  compensation  may  be  demanded  upon 
an  implied  promise  in  the  absence  of  an  express  promise  of  com- 
pensation. The  authorities  holding  this  doctrine  in  various  forms 
are  numerous."14 


"See  §§  47,  59. 

"Tiffany  v.  Kellogg  Iron  Works,  59  Misc.  113;  109  N.  Y.  Suppl.  754  (1908); 
citing  Brown  v.  Travelers'  Life  &  Accident  Ins.  Co.,  26  App.  Div.  544;  50  N.  Y. 
Suppl.  729;  People  v.  Montgomery,  13  Abb.  Pr.  (N.  S.)  207  (N.  Y.) ;  Schofield  v. 
Little,  2  Ga.  App.  286;  58  S.  E.  666;  Board  of  Comm.  v.  Lee,  3  Col.  App.  17";  32 
Pac.  841;  Barrus  v.  Phaneus,  166  Mass.  123;  44  N.  E.  141;  32  L.  R.  A.  619;  Flinn  v. 
Prairie  Co.,  60  Ark.  204;  29  S.  W.  459;  27  L.  R.  A.  669;  46  Am.  St.  Rep.  168;  St. 
Francis  Co.  v.  Cummings,  55  Ark.  419;  18  S.  W.  461;  Summers  v.  State,  5  Tex. 
App.  365;  32  Am.  Rep.  573;  Ex  parte  Dement,  53  Ala.  389;  25  Am.  Rep.  611. 


CHAPTER  VIII 
REVOCATION   OF   BROKER'S  AUTHORITY 

§  80.     Termination  of  Agency  by  Mutual  Consent  (p.  79) 

Where  the  broker  is  employed  for  a  definite  time,  as  where  he  is 
to  sell  the  property  within  a  specified  time,  he  is  not  entitled  to  com- 
pensation if  he  fails  to  procure  a  purchaser  within  the  time.1 

This  is  so  though  a  sale  is  subsequently  made  to  a  purchaser  who 
negotiated  with  the  broker  within  such  time,  provided  the  owner 
acted  in  good  faith,  and  did  not  interfere  with  the  broker's  efforts 
to  make  the  sale  within  the  specified  time.2 

§  82.      Termination  of  Agency  at  Pleasure  of  Principal 

(p.  80) 

Add  to  footnote  3: 

Howard  v.   Street,  125  Md.   289;   93  Atl.  923   (1915). 

Add  to  footnote  5: 

Newman  v.   Dunleavy,   149  Pac.  970;   §5460,  Rev.  Codes  Mont. 

§  83.     Termination  by  Principal  After  Lapse  of  Reason- 
able Time  (p.  81) 

The  broker's  authority  may  be  expressly  revoked,  but,  unless  so 
revoked,  it  continues  for  a  reasonable  time.  There  are  authorities 
which  hold  that  in  order  to  establish  a  contract,  an  offer  must  be 
accepted  as  made,  and  that  a  counter-offer  is  a  rejection.  That  rule, 
however,  does  not  apply  to  offers  made  by  a  broker,  for  the  reason 
that  the  relation  between  the  broker  and  the  employer  desiring  to 
sell  is  not  such  as  involves  an  offer  by  the  owner  to  sell  his  land  to 
the  broker.  What  the  owner  really  does  is  to  offer  to  employ  the 
broker,  and  that  offer  is  accepted,  and  the  contract  of  employment 
becomes  complete  when  the  broker  undertakes  to  act  as  broker  and 
to  use  his  best  efforts  to  find  a  buyer.  ^The  broker  does  not,  there- 
fore, put  an  end  to  his  employment  by  reporting  offers  lower  than 
the  price  named  by  the  owner,  and  this  is  especially  true  where  the 
broker  has  been  expressly  directed  by  the  owner  to  submit  all  offers 
which  may  come  to  the  broker.3 


hughes  v.   Daniel,  65  So.   (Ala.)   518   (1914). 
"Murray  v.   Miller,    166   S.   W.    (Ark.)    536    (1914). 
'Martin  v.  Crumb,  216  N.  Y.  500;   111  N.  E.  62  (1916). 

33 


34  POWERS,    AUTHORITY   AND   RIGHTS    OF    BROKER 

In  at  least  one  state  it  has  been  sought  to  regulate  the  duration 
of  the  employment  by  statute.  In  Maine  it  is  provided  that  "all 
contracts  entered  into  after  August  1,  1911,  for  the  sale  or  transfer 
of  real  estate,  and  all  contracts  whereby  a  person,  company  or  corpo- 
ration becqmes  an  agent  for  the  sale  or  transfer  of  real  estate,  shall 
become  void  in  one  year  from  the  date  such  contract  is  entered  into 
unless  the  time  for  the  termination  thereof  is  definitely  stated."4 

Where  the  principal  consummates  a  sale  brought  about  by  the 
broker,  the  principal  cannot  claim  that  the  sale  was  not  made  within 
a  reasonable  time.5 

Where  brokers  were  put  in  charge  of  selling  258  lots  under 
an  agreement  which  specified  no  particular  duration,  and  the  brokers 
had  sold  only  two  of  the  lots  in  four  months,  it  was  held  that,  "they 
had  demonstrated  their  inability  to  perform,  even  though  they  were 
entitled  to  a  reasonable  time  within  which  to  do  so,  and  for  that 
reason  the  defendants  (the  principals)  were  justified  in  terminating 
the  contract"  by  notice  to  the  broker  to  that  effect,  and  that  as  the 
authority  to  sell  was  not  coupled  with  an  interest  it  could  be  revoked 
at  any  time  before  a  sale  took  place,  if  the  principal  acted  in  good 
faith  without  incurring  any  liability  by  the  principal.6 

At  page  82,  at  end  of  text,  add: 

See  Rand  v.  Contrite,  64  111.  App.  208  (1896). 

§  85.     Revocation  of  Agency  by  Principal   Must  Be  in 
Good  Faith  (p.  84) 

Where  the  evidence  is  conflicting,  the  good  faith  of  the  principal 
in  terminating  the  broker's  authority  and  at  once  selling  to  the  same 
purchaser  through  another  broker,  is  a  question  of  fact  for  the  jury.7 

§  87.     Termination  of  Agency  by  Previous  Sale   (p.  86) 

Add  the  following  footnote: 

See   §   237  of  Supplement 

Add  to  footnote  27: 

Teal  v.  McKnight,  110  La.  256;  34  So.  434  (1903). 

Add  to  footnote  28: 

Smith  v.   Fowler,    57  Tex.   Civ.   App.    356;    122   S.  W.    598    (1909); 
White  v.  Hoskins,   121   Iowa  354;  96  N.  W.  876   (1903). 

Add  to  footnote  29: 

Schusterman   v.   Kraus,   148  App.    Div.    727;    132   N.   Y.   Suppl.    758 
(1912). 


«Ch.  157,  L.  1911,  Me.     See  Odlin  v.  McAllaster,  112  Me.  89;  90  Atl.  1086  (1914). 
"Morgan  v.  Keller,  194  Mo.  680   (1905). 

•O'Hara  v.    Murray,    144  App.    Div.    113;    128   N.   Y.   Suppl.    1009    (1911);   citing 
Stier  v.  Imperial  Life  Ins.  Co.,  58  Fed.  Rep.  843. 

TL'Eckise  v.  Field,  154  App.  Div.  685;  139  N.  Y.  Suppl.  383   (1913). 


Part  II — Commissions  and  Their  Recovery 


CHAPTER  IX 
GENERAL  RULES  AS  TO  COMMISSIONS 

§  97.     Respective  Rights  of  Brokers  when  Several  Are 
Employed  (p.  95) 

''Where  the  property  is  placed  in  the  hands  of  several  brokers  for 
sale,  the  owner  is  bound  to  pay  the  broker  who  in  fact  effects  the 
sale,  and  cannot  exercise  his  option."1 

Where  brokers  work  on  a  deal  as  quasi-partners  or  joint  adven- 
turers, payment  of  the  whole  amount  due  to  one  of  them  as  agreed 
would  seem  to  preclude  recovery  by  the  other  from  the  principal, 
and  leave  at  best  a  cause  of  action  between  the  joint  adventurers.2 

Upon  an  issue  in  an  action  between  two  real  estate  brokers  as  to 
whether  there  was  an  agreement  between  them  to  divide  the  com- 
missions for  a  certain  sale,  evidence  of  a  usage  among  real  estate 
brokers  that  two  making  a  sale  divide  the  commission  equally,  unless 
a  different  arrangement  is  made,  is  not  admissible.3 

Add  to  footnote  6  (p.  96)  : 

Leadville  Mining  Co.  v.  Hemphill,  149  Pac.  (Ariz.)  384  (1915); 
Idelson  v.  Robinson,  27  Colo.  App.  507;  150  Pac.  322  (1915);  Groskin  v. 
Mn,,rf,  24')  I'n.  242;  94  All.  1057  (1915);  McCoombs  v.  Moss,  181  S.  W. 
(Ark.)  907  (1916). 

Add  to  footnote  6  (p.  96)  : 

Cissel  v.  Hayden,  41  App.  D.  C.  477  (1914). 

§  98.     Rule  as  to  Commissions  when  Several  Brokers  Are 
Employed  (p.  97) 

At  head  of  text  insert  the  following  two  paragraphs: 
I/Where   real   property   is   given   to   several   brokers    for   sale   or 
exchange,  the  one  first  producing  a  customer  and  consummating  a 
sale  or  exchange  is  entitled  to  the  broker's  commissions. 


'Beoueher  v.  Clark.  81  Kan.  250;  106  Pac.  39   (1910);  citing  Eggleston  v.  Austin, 
27  Kan.  245;   Votaw  v.  McK.,-v,r,  7.,  Kan.  870;  92  Pac.  1120;  19  Cyc.  260. 
'Jenkins  v.   Mahoney,   142  A,,,,.    Div    653;   127  NY.  Suppl.  573   (1911) 
"Syllabus  by  the  court  in  Smith  v.   Barrmger,  37  Minn.  94;  33  N.  W.   116   (1887). 

35 


36  COMMISSIONS   AND    THEIE   RECOVERY 

And  where,  in  such  a  case,  negotiations  have  been  had  by  one 
of  the  brokers  with  a  purchaser  and  afterwards  a  contract  is  made 
with  the  same  purchaser  by  other  brokers  on  other  terms  than  those 
suggested  by  the  former  broker,  and  the  latter  brokers  actually  bring 
the  parties  together  and  are  the  procuring  cause  of  the  contract,  in 
the  absence  of  bad  faith  on  the  part  of  the  vendor  they  alone  are 
entitled  to  commissions.4 

§  100.     Liability  for  Commissions  when  Principal  Nego- 
tiates Sale   (p.  101) 

Add  to  footnote  23: 

Blumenthal   v.    Bridges,   91   Ark.   212;    120   S.  W.   974;   24   L.   R.   A. 
(N.   S.)    279. 


*Farber  v.   Cohn,   74  Misc.   396;   132  N.   Y.   Suppl.  348   (1911). 


CHAPTER  X 
BROKER  MUST  BE  EMPLOYED 

§   104.      Volunteers  Not  Entitled  to  Commission    (p.   105) 

/'The  basis  for  claim  for  commissions  is  the  broker's  employment.1 

^O-Where  a  real  estate  broker  acting   for  another  who  desires  to 

purchase  real  estate  approaches  the  owner  of  certain  property  and 

negotiates    for    the    purchase    thereof,   no   contract    will    be    implied 

therefrom  on  the  part  of  such  owner  to  pay  the  broker.2 

Where  a  person  is  regularly  engaged  in  the  business  of  real 
estate  brokerage,  conscious  acceptance  of  his  services  in  that  capacity 
may  raise  an  implied  contract  to  pay  therefor,  but  the  same  rule 
would  not  otherwise  apply.3 

Add  to  footnote  1: 

See  Belden  v.  Kcllwood  Realty  Compaay,  74  Misc.  61;  131  N.  Y. 
Suppl.  580  (1911),  as  to  attempt  of  purchaser  or  tenant  to  force  services 
of  selected  broker  upon  vendor  or  owner. 

§  107.     Manner  of  Employment  (p.  108) 

Frequently  the  broker  is  requested  by  a  person  desirous  of  pur- 
chasing property  to  seek  the  owner  and  endeavor  to  negotiate  a  sale. 
The  broker  thereupon  ascertains  who  the  owner  is  and  informs  him 
that  he  represents  a  person  who  may  purchase  the  property  and  that 
if  a  sale  is  effected  the  broker  expects  the  seller  to  pay  a  com- 
mission. In  such  case^tne  broker,  having  told  the  seller  that  In-,  Ilie 
broker,  represents  the  purchaser,  is  entitled  to  the  commission  if  Ilic 
seller  accepts  the  offer  of  purchase.  ^-The  owner  may  accept  or  reject 
the  offer,  as  he  chooses,  but  if  he  accepts  it  he  must  do  so  subject  lo 
the  condition  that  commissions  be  paid  as  stated.4 

Oral  agreements  between  a  real  estate  broker  and  his  principal 
are  merged  in  a  subsequent  written  contract  of  employment  and  are 
not  binding  when  inconsistent  with  the  writing.5 

§   111.     Ratification  by  Implication   (p.  Ill) 

Add  to  footnote  27,  (p.  112) : 

Sanders  v.  Schultheis,  79   Misc.   241;   139  N.  Y.   Suppl.   866   (1913). 

Wilier  v.  Waclark  Realty  Co.,  139  App.  Div.  47;   123  N.  Y.  Suppl.  837   (1910). 

Turek  v.  Opava,   192  111.  App.  270   (1915). 

3Hevia  v.  Wheelock.155  App.  Div.  387;  140  N.  Y.  Suppl.  351   (191.!). 

4See  Dickinson  v.  Tysen.  209  N.  Y.  395  (1913);  Foss  v.  N.  Y.  C.  etc.,  R.  R. 
Co.,  161  App.  Div.  681;  146  N.  Y.  Suppl.  930  (1914);  affd.,  217  N.  Y.  727  (1916),  no 
opinion.  See  §  142  from  which  these  cases  are  quoted. 

BKrisch  v    Day,  150  App.   Div.   154;   134   N.  V.   Suppl.  803   (1912). 

37 


CHAPTER  XI 
BROKER   MUST   BE   PROCURING   CAUSE   OF   SALE 

§  116.     Procuring  Cause  (p.  117) 

*• — 'TtThe  broker  is  entitled  to  his  commission  if  he  is  the  primary, 

proximate,  and  procuring  cause  of  the  sale."1 

i^-The  broker  must  show  he  was  the  procuring  cause  of  the  sale.2 

Add  to  footnote  IS  (p.  117)  : 

Hayden  v.  Ashley,  86  Wash.    653;   ISO  Pac.   1147   (1915). 

Add  to  footnote  Ik  (p.  118): 

Koliha  v.  Jonas,  98  Neb.  790;  154  N.  W.  556  (1915).  And  so  if  the 
husband  of  the  owner  declines  to  join  in  a  contract  of  sale.  Joice  v.  Nor- 
man, 192  111.  App.  285  (1915).  See  also  §§  167,  191. 

Add  to  footnote  15  (p.  118): 

Cf.  Laubscher  v.  Mixell,  153  N.  W.  (Iowa)  335  (1915),  as  to 
homestead  lands. 

§  117.     What  is  Required  to  Constitute  a  Broker  a  "Pro- 
curing Cause"    (p.   118) 

i-      To  earn  his  commission  the  broker  need  only  produce  a   ready, 

willing,  and  able  purchaser.3 

This  rule  has  been  codified  in  some  states,  as   for  example  in 

Georgia,   where  it  is   provided  that   "the  broker's  commissions   are 

earned  when,  during  the  agency,  he  finds  a  purchaser  ready,  able 

and  willing  to  buy,  and  who  actually  offers  to  buy  on  the  terms 

stipulated  by  the  owner."4 

Add  to  footnote  16  (p.  119): 

Davidson  v.  Stocky,  202  N.  Y.  423;  95  N.  E.  753  (1911);  Tanenbaum 
v.  Boehm,  202  N.  Y.  293;  95  N.  E.  708  (1911);  Hammack  v.  Friend, 
180  Mo.  App.  472;  166  S.  W.  647  (1914);  Cavanaugh  v.  Conway,  36 
R.  I.  571;  90  Atl.  1080  (1914);  Beoupher  v.  Clark.  81  Kan.  250;  106 
Pac.  39  (1910);  Betz  v.  Land  Co.,  46  Kan.  45;  26  Pac.  456;  Stewart  v. 
Fowler,  53  Kan.  537;  36  Pac.  1002;  Marlatt  v.  Elliott,  69  Kan.  477;  77 
Pac.  104;  Gelatt  v.  Ridge,  117  Mo.  553;  23  S.  W.  882;  38  Am.  St. 
Rep.  683. 

In  Goodmanson  v.  Rosenstein,  144  111.  App.  243  (1908),  it  was  said 
that  when  the  broker  produced  a  purchaser  ready,  willing,  and  able  to 
buy  he  thereby  earned  his  commission. 


'Beougher  v.  Clark,  81   Kan.  250;   106  Pac.  39   (1910). 

'Owcharoffsky  v.  Trustees  of  W.  C.  M.  Church,  86  Misc.  36;  148  N.  Y.  Suppl. 
138  (1914);  May  Co.  v.  Holland  Holding  Co.,  156  App.  Div.  162;  140  N.  Y.  Suppl. 
1061  (1913);  Handy  v.  Van  Cortlandt  Realty  Co.,  156  App.  Div.  110;  140  N.  Y.  Suppl. 
1081  (1913). 

"Watkins  v.  Thomas,   141   Mo.   App.    263;    124  S.   W.    1063    (1909). 

4§3587,  Ga.   Code    (§3015,   Code,   1895). 

38 


BROKER    MUST    BE    PROCURING    CAUSE   OF   SALE  39 


§  119.     General  Rule  as  to  "Procuring  Cause"  (p.  124) 

i-The  broker  is  not  required  to  procure  an  enforceable  contract  of 
sale  with  the  purchaser;  it  is  enough  if  he  produces  a  purchaser 
ready,  willing,  and  able  to  buy  the  property  on  the  principal's  terms.5 

§  121.     Effect  of  Promises  to  Pay  Commission  (p.  126) 

^^Agreeing  in  the  contract  of  sale  who  is  the  broker  is  nothing 
more  than  an  evidentiary  fact  by  way  of  admission  that  the  broker 
named  brought  about  the  sale.6  Such  a  promise  is  executory  in  char- 
acter, and  if  the  services  have  already  been  rendered  when  such 
promise  is  made,  it  rests  upon  no  consideration  and  is  unen forcible.7 

In  Petry  v.  Haves,8  Mr.  Justice  Marean  of  the  New  York  Supreme 
Court  says,  "The  clause  inserted  in  the  contract  for  exchange  touch- 
ing the  payment  of  commissions  to  brokers  is  not  a  part  of  the 
contract.  It  in  no  way  relates  to  the  obligations  of  the  contract- 
ing parties  toward  each  other.  Neither  is  it  a  promise  to  the 
brokers  to  pay  commissions  which  can  be  made  the  foundation  of 
an  action  by  the  brokers.  It  is  at  the  best  only  a  declaration  of 
fact  to  which  the  parties  appended  their  signatures  and  which 
may  be  used  as  evidence  against  them.  Whenever  and  wherever 
it  may  be  offered  in  evidence  against  them  or  either  of  them  it 
may  be  met  by  evidence  that  they  or  either  of  them  against  whom 
it  is  offered  signed  the  instrument  in  ignorance,  that  such  clause 
had  been  inserted  therein.  Such  proof  being  made,  the  clause  is 
deprived  of  all  probative  force.  There  is  therefore  no  reason  for 
this  action  to  eliminate  the  clause  in  question  from  the  contract 
and  none  for  staying  the  brokers'  suit  for  commissions  until  that 
can  be  done."  In  this  case  the  clause  was,  "$150  commission  to  be 
paid  to  Thos.  J.  Walsh  and  James  K.  Knudson,  Jr.  on  closing  of 
this  title  for  acting  as  brokers  in  this  exchange." 

At  page  127,  at  the  end  of  §  121,  add:  And  so,  inserting  a 
clause  in  a  lease  to  the  effect  that  A  was  the  broker  in  the  trans- 
action, cannot  affect  the  rights  of  another  broker  if  he  had  any 
rights,  neither  can  the  proposed  tenant,  by  stating  that  his  atten- 
tion had  been  called  to  the  property  by  the  broker  not  mentioned 
in  the  lease,  compel  the  landlord  to  accept  such  broker  as  the 
landlord's  broker.9  In  other  words,  if  a  broker  is  really  the  pro- 


"Schwcid  v.  Storandt,  157  App.  Div.  RSS:  I43*.  Y    Suppl    161   (191.!) 
•Hevia  v.  Wheelock,  155  App.  Div.  387;  140  N.  Y.  Suppl.  351   (1913). 
•'Id. 

c.  61;  131  N.  Y.  Suppl.  580  (1911). 


40  COMMISSIONS   AND    THEIR   RECOVERY 

curing  cause,  he  cannot  be  deprived  of  his  rights  simply  because  the 
owner  of  the  property  insists  on  saying  in  the  lease,  or  in  the 
contract  of  sale,  that  someone  else  was  the  broker,  and,  on  the 
other  hand,  the  owner  of  the  property  cannot  be  forced  to  pay 
commission  to  a  broker  merely  because  the  proposed  purchaser  or 
the  proposed  tenant  claims  that  such  broker  called  his  attention 
to  the  property,  unless  such  broker  has  been  employed  by  the 
owner  of  the  land,  or  his  negotiations  have  been  ratified  to  such 
an  extent  as  to  make  the  ratification  equivalent  to  employment.10 

§  122.     Unsuccessful  Efforts   (p.  127) 

The  broker  must  be  the  procuring  cause  of  the  sale.11 

§  125.    Effort  Required  of  Broker  (p.  130) 

lXA  mere  "paper  offer"  to  buy  is  not  sufficient.  The  broker  must 
show  that  his  proposed  purchaser  was  ready,  willing  and  able  to 
carry  out  the  offer.12 

"To  entitle  a  broker  to  sell  or  to  find  a  purchaser  of  real  estate, 
to  recover  commissions,  where  no  contract  of  sale  is  executed  by 
his  employer  and  the  purchaser,  it  is  incumbent  upon  him  to  show 
not  only  that  he  procured  a  person  who  was  ready,  willing  and  able 
to  purchase  the  property  upon  the  terms  authorized  by  his  employer, 
but  also  that  his  employer  was  advised  of  that  fact  and  given 
an  opportunity  to  complete  the  sale  to  the  proposed  purchaser,  and 
that  the  sale  was  not  consummated  because  of  his  employer's  default. 
The  mere  fact  that  the  broker  found  a  willing  and  capable  pur- 
chaser is  not  enough.  It  is  obvious  that  he  is  not  entitled  to 
compensation  for  such  services  unless  his  employer  is  afforded  an 
opportunity  to  receive  the  benefits  of  them."i; 

It  may  be  said  generally,  that  the  broker's  right  of  recovery 
is  not  dependent  upon  the  knowledge  of  the  principal  that  the 
purchaser  came  to  purchase  in  consequence  of  information  obtained 
through  the  broker.14 

There  is  "a  line  of  cases,  of  which  Sussdorff  v.  Schmidt15  is 
a  leading  one,  in  which  a  broker  has  been  held  to  be  entitled  to  a 


*>See  5   103. 

llHandy  v.  Van  Cortlandt  Realty  Co.,  156  App.  Div.  110;  140  N.  Y.  Suppl.  1081 
(1913);  May  Co.  v.  Holland  Holding  Co.,  156  App.  Div.  162;  140  N.  Y.  Suppl.  1061  (1913). 

"Morgan  v.  Zanger,  153  N.  W.   (Mich.)   1079  (1915). 

1»Coppaqe  v.  Howard,  127  Md.  512;  96  Atl.  642  (1916). 

"McLaughlin  v.  Campbell  (N.  J.  Ct.  of  E.  &  A.),  74  Atl.  530  (1909);  citing  Vreeland 
v.  Vetterlein,  33  N.  J.  L.  247;  Derrickson  v.  Quimby,  43  N.  J.  L.  373;  Somers  v.  West- 
coat.  66  N.  J.  L.  551,  553;  49  Atl.  462;  Sussdorff  v.  Schmidt,  55  N.  Y.  320. 

15  55  N.  Y.  319. 


BROKER    MUST    UK    I'KorriUNG    C.M'SK    OF    SALE  41 

commission,  if  he  is  in  fact  the  procuring  cause  of  the  sale,  even 
though  he  did  not  actually  bring  the  parties  together,  and  was  not 
present  when  the  sale  was  consummated.  That  a  broker  may  under 
such  circumstances  be  entitled  to  compensation  is  not  to  be  doubted, 
but  to  justify  a  recovery  in  such  a  case  it  must  be  made  abundantly 
clear  that  the  broker  was  the  efficient  agent  or  procuring  cause, 
not  alone  of  directing  the  purchaser's  attention  to  the  property,  but 
of  effecting  the  sale.  He  must  not  only  find  the  purchaser,  but  the 
sale  must  proceed  from  his  efforts  acting  as  broker.  In  short,  it 
must  affirmatively  appear  that  the  purchaser  was  induced  to  apply 
to  the  owner  through  the  means  employed  by  the  broker."16 

A  clause  in  a  contract  with  a  broker  for  commissions  on  the  sale 
of  land  to  any  person  who  became  interested  through  the  broker's 
efforts,  does  not  apply  to  a  person  who  had  been  interested  there- 
tofore.17 

Where  a  written  contract  employing  a  broker  to  procure  pur- 
chasers for  lands  provided  that  he  should  be  entitled  to  commis- 
sions on  sales  made  to  purchasers  whom  he  brought  to  his  principal's 
office,  or  where  he  was  the  procuring  cause  of  the  sale,  and  not 
otherwise,  he  is  not  entitled  to  commissions  where  he  merely  talked 
upon  the  street  to  a  person  who  subsequently  became  a  purchaser 
and  gave  him  literature  describing  the  lands,  but  with  whom  he 
never  had  any  subsequent  communication.18 

Where  a  broker  was  employed  to  sell  certain  real  estate  to  a 
municipality,  and  procured  its  assent  to  purchase  on  the  terms  pre- 
scribed, but  subsequently,  in-  order  to  overcome  a  supposed  defect 
in  the  title,  the  property  was  taken  in  condemnation  proceedings 
for  a  sum  in  excess  of  the  amount  the  broker  was  authorized  to 
sell  for,  he  is  entitled  to  recover  his  agreed  commission  from  his 
employer  to  whom  the  award  was  paid.19 

Add  to  footnote  .'/..': 

Hanih  v.  V;in  Cortlandt  Realtv  Co.,  156  App.  Div.  110;  140  N.  Y •  SuPPj- 
1081  (1913);  Mav  Co.  v.  Holland  Holding  Co.,  156  App.  Div.  162;  140  N.  Y. 
Suppl.  1061  (1913). 

§  126.     Presence  of  Broker  (p.  131) 

Add  to  footnote  52: 

Morrison   v.    Hale,  96  All.    (N.    H.)    298    (1915). 

Add  to  footnote  W  (p.  tSS): 

Travis  v.  Bowron,  138  App.  Div.  554;  123  N.  Y.  Suppl.  290  (1910);  citing 
Lloyd  v.  Matthews,  51  N.  Y.  134. 


"Haase  v.  Ullman,  148  App.  Div.  40.  43;  131  N.  Y.  Suppl.  1050  (1911). 
17Mav  v    Tiche    15"7  N    W.  23   (1911). 

"Krisch'v    Day,  150  App.  Div.  154;  134  N.  Y.  Suppl    803  (1912). 
'Tyler  v.   Seiler,  86  Misc.   185;   136  N.  Y.  Suppl.  394  (1912). 


42  COMMISSIONS   AND    THEIR  EECOVEEY 

§   127 a.     Notifying  Principal  That  Customer  is  Broker's 

Client  (p.  134) 

"The  weight  of  authority,  outside  of  Minnesota,  is  to  the  effect 
that,  if  a  broker,  even  though  he  did  not  have  the  exclusive  agency, 
was  in  fact  the  procuring  cause  of  the  purchase,  and  would  other- 
wise be  entitled  to  commissions,  he  will  not  be  deprived  thereof 
by  the  fact  that  the  owner  at  the  time  of  the  sale  did  not  know 
of  his  instrumentality  in  procuring  the  purchaser."20 

But  where  the  broker,  by  negligence  or  design,  keeps  his  prin- 
cipal in  ignorance  of  the  fact  that  a  proposed  purchaser  was  the 
customer  of  the  broker,  and  the  principal  was  thus  led  to  recognize 
another  as  the  broker  who  brought  about  the  sale,  it  may  operate 
to  deprive  the  first  broker  of  any  claim  for  commissions,  if  such 
complication  is  attributable  to  the  fault  of  the  first  broker.21 

But  where  a  landowner  employed  a  broker  to  secure  a  purchaser 
and  agreed  that  he  should  have  commissions  if  a  sale  were  made 
to  a  certain  named  person,  whether  effected  between  the  broker 
and  the  customer,  or  consummated  by  inducing  the  customer  to 
negotiate  directly  with  the  owner,  the  broker  may  recover  commis- 
sions where  the  sale  was  effected  in  the  latter  way  although  he 
did  not  notify  the  owner  that  he  sent  the  customer  to  him.22 

§  128.     Advertising  (p.  134) 

/^The^services  of  the  broker  must  be  the  direct  and  proximate 
cause,  not  the  indirect,  accidental  or  remote  cause  of  bringing  the 
customer  to  his  principal.23 1-  -Of  course,  where  a  broker  advertises 
property  and  a  customer  is  procured  thereby,  that  is  the  direct 
result  of  the  efforts  of  the  broker."24 

But  merely  including  the  property  in  a  catalogue  of  the  broker's 
showing  what  property  the  broker  has  for  sale,  would  not  entitle 
the  broker  to  a  commission  on  a  sale  to  one  who  had  seen  the 
catalogue,  unless  the  broker  is  also  the  proximate  or  procuring  cause 
of  the  sale.25 


"From  Editorial  note  to  Quist  v.  Goodfellow,  8  L.  R.  A.  (N.  S.)  153,  case  reported 
99  Minn.  509;  110  N.  W.  65  (1906);  Colonial  Trust  Co.  v.  Pacific  Co.,  158  Fed.  280  (1907); 
Jungeblut  v.  Gindra,  134  App.  Div.  291;  118  N.  Y.  Suppl.  942  (1909);  Millan  v.  Porter, 
31  Mo.  App.  576  (1888).  See  also  §§  125,  130. 

''Courtney  v.    Rhodes,   148  App.    Div.   799;   133   N.   Y.    Suppl.   363    (1912).    See  also 

^Walker  v.  Sterry,  146  App.  Div.  332;  130  N.  Y.  Suppl.  801   (1911). 

MSee  Cole  v.  Kosch,  116  App.  Div.  715;  102  N.  Y.  Suppl.  14;  Meyer  v.  Improved 
Pro.  Holding  Co.,  137  App.  Div.  691;  122  N.  Y.  Suppl.  296;  Boyd  v.  Improved  Prop. 
Holding  Co.,  135  App.  Div.  623;  120  N.  Y.  Suppl.  850;  Sibbald  v.  Bethlehem  Iron  Co., 
83  N.  Y.  373,  378;  38  Am.  Rep.  441. 

"Lord  v.  United  States  Transportation  Co.,  143  App.  Div.  437,  454,  455;  128  N.  Y. 
Suppl.  451  (1911);  citing  Kiernan  v.  Bloom,  91  App.  Div.  429;  86  N.  Y.  Suppl.  899; 
Sussdorff  v.  Schmidt.  55  N.  Y.  319. 

»Way  v.  Turner,  127  Md.  327;  96  Atl.  676  (1915). 


BROKER    MUST   BE   PROCURING    CAUSE   OF    SM.K  43 

Untrue  and  misleading  advertisements  are  made  a  criminal  offense 
in  some  states,  as  in  New  York,  where  it  is  provided  that,  "If  any 
person,  firm,  corporation  or  association,  or  agent  or  employee  thereof, 
with  intent  to  sell  or  in  any  wise  dispose  of  merchandise,  real  estate, 
service,  or  anything  offered  by  such  person,  firm,  corporation  or  asso- 
ciation, or  agent  or  employee  thereof,  directly  or  indirectly,  to  the 
public  for  sale  or  distribution,  or  with  intent  to  increase  the  con- 
sumption thereof,  or  to  induce  the  public  in  any  manner  to  enter 
into"  any  obligation  relating  thereto,  or  to  acquire  title  thereto,  or 
an  interest  therein,  knowingly  makes,  publishes,  disseminates,  cir- 
culates, or  places  before  the  public,  or  causes,  directly  or  indirectly, 
to  be  made,  published,  disseminated,  circulated,  or  placed  before 
the  public,  in  this  state,  in  a  newspaper,  magazine  or  other  publica- 
tion, or  in  the  form  of  a  book,  notice,  circular,  pamphlet,  letter, 
handbill,  poster,  bill,  sign,  placard,  card,  label,  or  tag,  or  in  any 
other  way,  an  advertisement,  announcement  or  statement  of  any  sort 
regarding  merchandise,  service  or  anything  so  offered  to  the  public 
which  contains  any  assertion,  representation  or  statement  of  fact 
that  is  untrue,  deceptive  or  misleading,  or  that  amounts  to  an  offer 
to  sell,  barter  or  exchange  real  estate,  by  means  of  prizes,  rewards, 
distinctions,  or  puzzle  methods,  such  person,  corporation  or  associa- 
tion, or  the  members  of  such  firm,  or  the  agent  of  such  person, 
corporation,  association  or  firm,  shall  be  guilty  of  a  misdemeanor, 
punishable  by  a  fine  of  not  less  than  twenty-five  dollars  nor  more 
than  one  thousand  dollars,  or  by  imprisonment  for  not  more  than 
one  year,  or  by  both  such  fine  and  imprisonment."2' 

§  130.     Consummation  of  Sale  by  Principal  (p.  137) 

"\Yhen  a  broker  calls  the  attention  of  a  prospective  purchaser 
to  property  which  he  has  been  authorized  to  offer  for  sale,  and 
communicates  that  fact  and  the  name  of  such  purchaser  to  the 
owner,  the  owner  cannot  defeat  the  broker's  claims  to  commission 
by  taking  up  and  completing  the  negotiations  himself,  unless  before 
so  doing  he  in  good  faith  terminates  the  contract  of  employment." '' 

Add  to  footnote  77: 

Beougher  v.  Clark,  81  Kan.  250;  106  Pac.  39  (1910);  McClave  v.  Paine. 
49  N  Y  561-  10  Am  Rep.  4.51;  Hin.ls  v.  Henry,  36  N.  J.  Law  328;  Dolan 
v  Scanlan  57  Cat  261;  Gelatt  v.  Ridge,  117  Mo.  553;  23  S.  W.  882;  38  Am. 
St  Rep  683  BrSgsv  Hall,  24  Cal.  App.  586;  141  Pac.  1067  (1914);  Hawkins 
v.  'Taylor,  186  111.  App.  365  (1914). 

ME  At\    M    v    P<-m1  T  aw   as  amended  by  Chapter  569,  Laws  1915. 
"Irtvi's  v!  IowPr^38aA'PP    DiJ.554;  123  N  A  Suppl.  W)  0910^  Ewan  v.  Power. 
165  Ky.  806;  178  S.  W.  1092;  Howard  v.  Street,  125  Md.  289;  93  Atl.  923. 


CHAPTER  XII 
SALE   MUST   BE   ON    EMPLOYER'S   TERMS 

132.  -  Purchaser  Must  Agree  to  Seller's  Terms  (p.  141) 

Where  the  broker  succeeds  in  procuring  a  person  ready,  willing, 
and  able  to  purchase  on  the  terms  of  the  vendor,  and  the  vendor 
then  imposes  new  conditions  to  which  the  purchaser  will  not  accede, 
and  the  whole  matter  is  then  abandoned,  the  broker  has  nevertheless 
earned  his  commission.1 

"In  the  absence  of  a  special  agreement,  the  services  rendered 
by  a  broker  to  an  owner  of  real  estate  generally  fall  into  one  of 
two  categories:  (1)  Where  the  owner  has  given  the  broker  the  full 
and  complete  terms  upon  which  he  is  willing  to  sell  his  property, 
and  not  merely  the  asking  price  thereof;  (2)  where  the  owner 
has  his  property  for  sale,  and  may  or  may  not  have  set  an  asking 
price  thereon,  but  does  not  fix  the  terms  of  the  transaction,  leaving 
them  to  be  determined  thereafter.  In  the  first  case  the  broker's 
duty  is  fulfilled  and  his  commissions  are  earned  when  he  produces 
a  customer  ready,  willing  and  able  to  comply  with  all  the  terms 
fixed  by  the  owner;  should  the  latter  then  desire  to  add  to  the  terms 
already  imposed,  the  additional  conditions  must  be  germane  to  the 
original  ones,  if  they  are  to  furnish  a  sufficient  reason  for  the 
refusal  to  pay  the  broker  in  case  of  the  customer's  refusal  to  agree 
to  any  modification  of  the  original  terms.  In  the  second  case,  the 
broker's  commissions  are  not  earned  until  the  customer  produced 
by  him  reaches  an  agreement  with  the  owner  upon  the  price  and 
terms  upon  which  a  sale  can  be  made.  This  of  course  does  not 
mean  that  a  contract  in  writing  must  be  signed  by  the  parties, 
but  that  their  minds  must  meet  not  only  upon  the  price  but  upon 
the  essential  terms  of  an  agreement  to  purchase."  2 

Where  the  only  terms  given  the  broker  were  the  price  and 
the  size  of  the  property  20  x  100,  "and  the  broker  produced  a  pro- 
posed buyer  who  refused  to  contract  because  the  vendor  presented 
a  contract  describing  the  property  as  20  x  100  "more  or  less,"  the 
addition  of  the  words  "more  or  less"  were  held  not  such  a  modifi- 


'Hutchinson  v.  Plaut.  218  Mass.  148;  105  N.  E.  1017  (1914).     See  also  5   ISO. 
'Arnold  v.  Schmeidler,  144  App.  Div.  420,  427;  129  N.  Y.  Suppl.  408  (1911). 

44 


SALE    MUST    BE   ON    EMPLOYER'S   TEK.MS  45 

cation  of  or  departure  from  the  terms  given  to  the  broker,  as  to 
justify  a  recovery  by  him  upon  his  purchaser's  refusal  to  take.3 
Add  to  footnote  6  (p.  142): 

See  also  §  150. 


All  of  Seller's  Terms  Must  be  Met  (p.  142) 
It  has  been  said  that  the  broker  must  procure  a  purchaser  on 
ail  the  terms  of  the  principal  even  as  to  the  date  of  closing  title. 
Where  no  terms  are  laid  down,  the  broker  is  said  to  take  the  hazard. 
As  ordinarily  the  time  of  closing  title  is  not  stated  when  the 
broker  is  engaged,  it  would,  seem  that  a  reasonable  rule  would  be 
that  the  broker  is  not  entitled  to  commissions  where  the  vendor 
had  fixed  the  time  for  closing  title  as  one  of  the  terms  of  sale, 
and  the  purchaser  refused  to  agree  thereto,  or  where  the  sale  is 
not  consummated  because  the  vendor  and  purchaser  were  unable 
to  agree  upon  a  time  fixed  for  closing  of  title,  and  no  meeting  of 
the  minds  resulted  because  of  that  circumstance.  It  would  seem 
exceedingly  harsh,  if  the  vendor  had  at  no  time  mentioned  any- 
thing about  the  time  for  closing  title,  and  the  broker  then  brought 
a  customer  ready,  willing,  and  able  to  purchase  at  the  price  and 
upon  the  terms  fixed  by  the  vendor,  to  then  permit  the  vendor  to 
defeat  a  suit  for  commissions,  merely  because  no  time  for  closing 
title  had  been  fixed  in  the  offer  presented. 

Where  the  owner  had  in  writing  authorized  a  broker  to  secure 
a  customer  for  $25,000,  "$10,000  of  which  must  be  paid  in  cash" 
and  $15,000  by  assuming  a  mortgage,  and  that  "this  contract  expires 
and  becomes  null  and  void  at  midnight  October  26,  1912,"  it 
undoubtedly  would  be  true  that  if  the  broker  produces  a  purchaser 
and  notifies  the  owner  within  the  time  of  the  contract,  it  would 
not  be  essential  that  the  purchaser  pay  the  cash  payment  before 
the  expiration  of  the  term  of  the  contract  unless  the  contract 
specifically  so  provided.  And  where  a  broker  produced  a  customer 
who  was  ready  to  take  the  property  at  the  price  and  subject  to 
the  mortgage  instead  of  assuming  the  mortgage,  the  court  seemed 
to  think  that  if  the  customer  had  paid  the  cash  payment  during 
the  life  of  the  contract,  the  court  would  have  been  willing  to  con- 
sider whether  or  not  the  owner,  by  his  subsequent  conduct,  waived 
the  provision  by  taking  the  property  subject  to  the  mortgage  instead 
of  assuming  the  mortgage,  as  the  contract  originally  provided.4 

Where  in  an  action  by  a  real  estate  broker  to  recover  com- 
missions, it  appears  that  he  was  only  authorized  by  the  defendant, 


•Levy  v    Sonneborn,  78  Misc.  50;  138  N.  Y.  Suppl.  285  (1912). 
nVittwer  v.  Hurwitz.  216  N.  Y.  259;  110  N.  E.  433  (1915). 


46  COMMISSIONS   AND   THEIE   RECOVERY 

an  attorney  at  law,  acting  as  agent  for  the  owners,  to  find  a  pur- 
chaser for  the  whole  of  a  certain  plot,  and  that  he  did  not  procure 
such  purchaser,  but  did  procure  one  for  a  portion  of  the  plot,  a 
judgment  for  the  plaintiff  should  be  reversed  and  the  complaint 
dismissed.5 

At  page  144,  at  end  of  §  188,  add: 

An  agent  to  sell  real  estate  cannot  bind  his  principal  "by  a 
contract  requiring  him  to  carry  out  or  perform  its  terms  else- 
where than  at  his  own  home  or  place  of  business,  even  though  it 
may  be  in  a  distant  state.  And  although  the  contract  is  clearly 
within  the  agent's  authority  as  to  price  and  time  of  payment,  yet 
if  the  agent  assumes  authority  to  insist  on  provisions  not  contem- 
plated by  the  agreement  of  agency — as,  for  example,  that  the  seller 
shall  send  his  -deed  to  a  certain  bank  for  delivery  or  that  the  pur- 
chase money  shall  be  paid  at  some  named  bank,  or  office,  in  the 
vicinity  of  the  land,  or  the  place  where  the  contract  is  made,  or 
elsewhere  than  at  the  seller's  place  of  residence  or  business,  or  that 
payment  be  conditioned  upon  the  seller's  delivery  of  an  abstract 
of  title  which  shall  be  found  sufficient  by  some  third  person — such 
added  provision  vitiates  the  entire  contract  and,  unless  ratified  or 
approved,  the  agent  cannot  recover  commissions  upon  any  sale  so 
made  or  attempted."  6 

§  134.    Acceptance  by  Owner  of  Different  Terms  (p.  144) 
Add  to  footnote  15: 

Futrell  v.   Reeves,   165   Ky.   282;   176   S.    W.   1151    (1915). 

§  135.     Broker's  Commission,  if  He  is  "Procuring  Cause," 
Not  Affected  by  Variation  of  Terms  (p.  145) 

Add  to  footnote  18: 

Lerner  v.  Harvey,  155  N.  W.  (Mich.)  427  (1915) ;  Doub  &  Co.  v.  Taylor, 
150  Pac.  687  (1915). 

§  136.    Requirements  as  to  Price  (p.  145) 

An  agent  to  sell  has  no  authority  to  sell  on  a  credit  unless 
specially  authorized  to  do  so  by  his  principal.7 

On  page  146  after  "for  all  cash,2*"  add: 

And  so  it  has  been  said  that  where  a  broker  has  no  authority 
to  sell,  except  for  cash,  a  sale  for  a  small  payment  of  cash  in 


'Martin  v.  Crumb,  158  App.  Div.  228;  142  N.  Y.  Suppl.  1096  (1913). 

•Anderson  v.  Howard,  155  N.  W.   (Iowa)   261    (1915). 

'McKay  v.  McKinnon,  58  Tex.  Civ.  App.  1;  122  S.   W.  440   (1909). 


SALE    MUST    BE    ON    EMPLOYER'S   TERMS  47 

hand,  balance  when  deed  and  satisfactory  abstract  should  be 
delivered,  is  not  a  cash  sale.8  Of  course,  if  such  terms  of  payment 
are  proposed,  and  are  accepted  by  the  principal,  that  presents  an 
entirely  different  question. 

Add  to  footnote  24: 

Anderson  v.  Howard,  155  N.  W.  (Iowa)  261   (1915). 

§   139.     Liability  of  Broker  for  Failure  to  Sell   (p.  148) 
Add  to  footnote  SO: 

Lord  v.  Wapato  Irr.  Co.,  142  Pac.  1172  (1914). 


•Anderson  v.  Howard.  155  N.  W.  (Iowa)  261   (1915). 


CHAPTER  XIII 
BROKER  MUST  ACT  IN  GOOD  FAITH 

§  141.    Good  Faith  (p.  150) 

"It  is  an  elementary  principle  that  an  agent  cannot  take  upon 
himself  incompatible  duties,  and  characters,  or  act  in  a  transaction 
where  he  has  an  adverse  interest  or  employment.  ...  In  such  a 
case  he  must  necessarily  be  unfaithful  to  one  or  the  other,  as  the 
duties  which  he  owes  to  his  respective  principals  are  conflicting, 
and  incapable  of  faithful  performance  by  the  same  person." ] 

"Where  fraud  is  claimed  by  which  a  person  is  induced  to  enter 
into  a  contract  with  brokers  or  others,  and  such  fraud  is  relied 
upon  as  a  defense  in  an  action  upon  the  contract  it  should  be  pleaded 
•  as  an  affirmative  defense.  In  an  action  upon  any  contract,  how- 
ever, evidence  to  show  that  the  person  bringing  the  action  has  failed 
to  perform  his  contract  in  whole  or  in  part  is  competent  under  a 
general  denial.  It  is  not  necessary  in  pleading  to  allege  specifi- 
cally facts  to  show  the  failure  of  the  person  bringing  the  action 
to  carry  out  the  contract  upon  which  the  action  is  brought.  Proof 
of  bad  faith  in  carrying  out  the  agreement  sued  upon  or  failure 
in  any  way  honestly,  fairly  and  in  good  faith  to  carry  out  the  con- 
tract upon  which  the  action  is  brought  can  be  asserted  and  shown 
under  a  general  denial."  2 

Add  to  footnote  1 : 

Garrigues  Co.  v.  International  Agri.  Corp.,  159  App.  Div.  877;  14+  N.  Y. 
Suppl.  982   (1913). 

Add  to  footnote  4  (p.  151): 

Cardozo  v.  Middle  Atl.  I.  Co.,  (Va.  App.)  82  S.  E.  80  (1914). 

§  142.     Accepting  Pay  from  or  Acting  for  Other  Party  to 
the  Transaction  (p.  151) 

That  it  is  not  always  an  easy  task  to  say  when  the  broker  is 
acting  in  good  faith  and  when  he  is  not,  must  be  evident.  In  one 
case,3  a  real  estate  broker  had  made  a  contract  whereby  he  agreed 


'Murphy  v.  Harrison  Granite  Co.,  168  App.  Div.  723,  730;  154  N.  Y.  Suppl.  546  (1915). 
'Dickinson  v.  Tysen,  209  N.  Y.  395  (1913). 

Toss  v.  N.  Y.  C.  &  H.  R.  R.  Co.,  161  App.   Div.  681;  146  N.  Y.  Suppl.  930  (1914); 
affd.,  217  N.  Y.  727   (1916),  no  opinion. 

48 


BROKER   MUST   ACT   IN    GOOD   FAITH  49 

to  conceal  his  principal,  a  railroad  company,  in  the  purchase  of 
certain  lands,  and  to  endeavor  to  obtain  the  lowest  price  and  to 
look  only  to  the  seller  for  his  commissions.  The  question  of  good 
faith  did  not  arise  through  any  objection  of  the  seller  who  was  to  pay 
the  commission,  but  after  the  railroad  company  had  purchased  some 
of  the  parcels  through  the  broker  under  this  arrangement,  it  subse- 
quently purchased  other  parcels  in  the  tract  directly  from  the  owners 
and  the  broker  sued  the  company  for  an  alleged  breach  of  the  agree- 
ment, and  the  question  of  good  faith  was  then  urged  by  the  railroad 
company. 

While  in  this  case  the  broker  was  denied  a  recovery  on  grounds 
other  than  the  question  of  good  faith,  that  question  was  discussed. 
One  of  the  justices  said:  "I  see  no  objection  to  a  broker,  represent- 
ing one  desirous  of  purchasing  property,  going  to  the  owner  and 
saying:  'I  know  some  one  who  may  purchase  your  property  if 
you  will  offer  it  at  a  reasonable  figure,  and  I  am  representing  him, 
but  I  shall  not  proceed  with  the  negotiations  unless  you  agree  to 
pay  for  my  services,  which  are  to  be  rendered  to  the  purchaser 
from  whom  I  am  to  receive  no  compensation.'  ....  There  was  no 
agreement  on  the  part  of  the  plaintiff  (the  broker)  to  do  any- 
thing for  the  owners,  and  he  was  not  vested  by  them  with  any 
discretion.  They  fixed  their  selling  prices  and  made  their  own 
propositions  to  him  to  be  presented  to  his  client." 

Another  justice  of  the  court  took  a  somewhat  different  view, 
however,  saying:  "I  concur  in  the  reversal  of  this  judgment  and 
dismissal  of  the  complaint  on  the  ground  stated  by  my  brother 
Laughlin,  but  I  do  not  concur  with  him  in  his  conclusion  that  a 
broker  engaged  in  a  negotiation  for  the  sale  of  real  property  can 
receive  a  commission  from  the  seller  and  at  the  same  time  con- 
tract with  the  purchaser  to  receive  an  advantage  from  him  without 
disclosing  such  contract  to  the  seller.  A  broker  approaching  the 
owner  of  real  estate  with  an  offer  to  purchase  the  property  and 
making  an  agreement  with  the  owner  of  the  property  that  he  shall 
receive  a  commission  from  the  owner  for  his  services  in  selling 
the  property  assumes  towards  the  seller  a  position  in  which  the 
utmost  good  faith  is  required  on  his  part.  The  very  fact  that  he 
undertakes  to  act  in  that  capacity  imposes  this  obligation  upon  him 
and  whether  he  gives  up  the  name  of  the  customer  or  not,  if  he 
is  to  receive  his  commission  from  the  seller  he  cannot  place  him- 
self in  a  position  antagonistic  to  the  seller's  interest  and  procure 
any  advantage  from  the  purchaser  without  disclosing  the  true 
condition  of  the  seller. 


50  COMMISSIONS   AND   THEIE  KECOVEEY 

"The  plaintiff  here  assumed  from  the  beginning  of  the  negotia- 
tion that  he  was  to  get  his  commission  from  the  seller.  The  fact 
that  he  represented  the  purchaser  in  his  endeavors  to  procure  the 
property  at  as  small  a  price  as  possible  justified  him  in  going  to 
the  owners  of  the  property  and  making  an  offer  and  endeavoring 
to  get  the  property  at  as  low  a  price  as  possible,  and  if  he  had 
acted  openly  with  the  owners  and  stated  that  he  represented  the 
purchaser  there  would  have  been  no  objection  to  the  transaction. 
But  that  he  never  did.  He  went  to  the  owners  of  the  property 
with  the  offer  and  demanded  a  commission  if  he  carried  out  the 
transaction.  To  that  the  owners  agreed.  He  thereby  became  bound 
to  state  to  the  owners  who  were  to  pay  him  for  his  services  that 
he  rendered,  his  relation  to  the  persons  who  had  made  the  offer 
and  that  he  was  acting  for  them  in  procuring  the  property  at  as 
small  a  price  as  possible  and  could  not  be  depended  on  to  represent 
the  owners  in  the  transaction,  and  to  show  the  utmost  good  faith. 
And  it  seems  to  me  that  if  he  had  completed  the  sale  the  owners 
could  have  refused  to  pay  him  any  commission  upon  the  ground 
that,  having  brought  an  offer  to  them  and  asked  them  for  a  com- 
mission for  services  that  he  rendered  to  them  in  making  a  sale, 
he  was  all  that  time  acting  against  their  interests  and  was  endeavor- 
ing not  to  induce  the  purchaser  to  pay  more,  but  to  induce  the 
seller  to  take  less.  This  seems  to  me  to  be  a  distinct  violation  of 
his  duty  to  the  sellers  as  laid  down  in  Dickinson  v.  Tyson."  4 

In  Dickinson  v.  Tyson,5  it  was  said:  "It  may  be  conceded  that 
where  a  broker  with  full  knowledge  of  the  person  whom  he  repre- 
sents, carries  an  offer  to  an  owner  of  real  property  and  makes  the 
same  contingent  upon  the  owner  paying  to  the  person  communi- 
cating the  offer,  a  specified  commission,  that  there  is  no  obligation 
on  the  part  of  the  person  communicating  the  offer  to  disclose  to 
the  owner  any  facts  within  his  knowledge  as  to  the  intention  or 
ability  of  the  proposed  purchaser  to  sell  the  property  to  another  at 
an  advanced  price.  In  such  case  it  rests  with  the  owner  to  accept 
the  offer  or  reject  it  as  he  chooses,  and  if  he  accepts  it  he  must 
do  so  subject  to  the  condition  that  commisions  be  paid  as  stated. 

"A  wholly  different  situation  exists  when  brokers  are  employed 
by  the  owner  to  procure  a  purchaser  for  his  real  property.  After 
such  an  agreement  brokers  act  by  the  authority  and  in  the  interest 
of  the  owner,  and  it  is  their  duty  to  act  fairly,  honestly,  and  in 
good  faith  towards  such  owner.  In  that  case  their  skill,  knowl- 


«209  N.  Y.  395  (1913). 


BROKER   MUST   ACT   IN    GOOD   FAITH  51 

edge  and  experience  must  be  used  to  benefit  the  owner  and  cannot 
be  withheld,  particularly  to  further  some  personal  interest  of  the 
brokers." 

§  145.     When  Refusal  to  Disclose  Information  is  Not  Bad 
Faith   (p.  154) 

L/\\.  is  the  duty  of  a  broker  to  impart  to  his  principal  any  informa- 
tion which  comes  under  his  observation  that  would  in  any  way 
affect  his  principal's  business,  so  that  his  principal  may  determine 
whether  the  deal  should  be  consummated  or  not.6 


"Greenblatt  v.  Fox,  59  Pa.  Super.  Co.  S3   (1915). 


CHAPTER  XIV 
AVAILABILITY  OF  PURCHASER 

§  147.     Ready  and  Willing  to  Purchase   (p.  155) 

Although  the  ready,  willing,  and  able  rule  is  concurred  in,  courts 
in  effect  are  sometimes  led  almost  by  the  contrary  rule,  because  of 
their  interpretation  as  to  what  amounts  to  a  "ready,  willing  and 
able"  purchaser.  For  example,  in  Mott  v.  Minor,1  it  was  said:  "In 
Gunn  v.  Bank  of  California,2  it  is  said:  'It  is,  of  course,  well 
settled  that  when  a  broker  employed  simply  to  negotiate  a  sale 
of  real  estate  has  found  a  purchaser  able,  ready  and  willing  to 
purchase  upon  the  vendor's  terms,  his  right  to  the  agreed  com- 
mission is  complete,  and  does  not  depend  upon  the  final  acceptance 

by  the  purchaser  of  a  conveyance  of  the  property  sold But 

the  question  here  is:  What  is  finding  or  procuring  a  purchaser 
within  the  meaning  of  the  rule  of  law  declared  in  this  and  the 
other  cases  cited?  Is  it  sufficient  for  a  broker  to  merely  find  a 
person  financially  able,  and  who  verbally  agrees  with  him  to  pur- 
chase upon  the  terms  of  the  vendor  and  makes  a  deposit,  but  who 
neither  signs  a  binding  agreement  to  purchase  upon  such  terms 
nor  is  produced  before  the  vendor  as  a  person  ready  and  willing  to 
enter  into  such  a  contract?  It  seems  to  us  very  clear  that  this 
question  must  be  answered  in  the  negative.  The  contract  of  the 
broker  is  to  negotiate  a  sale;  that  is,  to  procure  a  valid  contract 
to  purchase,  which  can  be  enforced  by  the  vendor  if  his  title  is 
perfect;  or  if  he  does  not  procure  such  contract,  to  bring  the 
vendor  and  the  proposed  purchaser  together,  that  the  vendor  may 
secure  such  a  contract,  unless  he  is  willing  to  trust  to  an  oral  agree- 
ment.' The  case  of  Hayden  v.  Grillo,3  is  quoted  to  the  same  effect, 
wherein  it  is  said :  'But  the  necessity  of  a  written  contract  of  sale 
may  be  rendered  unnecessary  if  the  agent  bring  the  vendor  and 
vendee  together,  and  the  latter  is  able  and  willing  and  offers  to 
complete  the  contract  provided  the  vendor  will  make  the  conveyance.' 
The  same  doctrine  is  declared  in  Mattingly  v.  Pennie,4  and  it  is 
held  that:  The  readiness  and  willingness  of  a  person  to  pur- 


HCal.  App.)  106  Pac.  244  (1909). 

2  99  Cal.  352;  33  Pac.  1106. 

S35  Mo.  App.  647. 

4  105  Cal.  519;  39  Pac.  202;  45  Am.  St.  Rep.  87. 

52 


AVAILABILITY    OF    1M   la  1 1. \SKIt  53 

chase  the  property  can  be  shown  only  by  an  offer  on  his  part  to 
purchase;  and  unless  he  has  actually  entered  into  a  contract  bind- 
ing him  to  purchase  or  has  offered  to  the  vendor  and  not  merely  to 
the  broker  to  enter  into  such  a  contract  he  cannot  be  considered 

a  purchaser.'  " 

§  148.     Purchaser  Not  Ready  and  Willing  (p.  156) 

The  proposed  purchaser  must  be  willing  to  purchase,  and  there- 
fore the  vendor,  in  resisting  the  broker's  claim  for  commissions, 
may  show  that  the  proposed  purchaser  was  not  willing  to  purchase 
but  told  the  vendor  to  let  another  proposed  purchaser  have  the 
property.5 

§  149.     Procuring  Person  Who  Takes  Option  (p.  158) 

A  broker  employed  under  the  ordinary  employment  to  find  a 
purchaser,  or  to  sell  property  is  not  entitled  to  compensation  for 
procuring  merely  a  customer  to  take  an  option,  which  has  never 
been  exercised.6 

It  has  been  suggested  that  while  the  mere  procuring  of  one 
to  take  an  option  does  not  entitle  the  broker,  to  commissions  if  the 
optionee  elects  not  to  exercise  the  same, -yet  the  broker  is  entitled 
to  his  commission  if  the  option  is  actually  exercised,  or  the  optionee 
is  willing  to  exercise  it,  but  is  prevented  from  so  doing  by  the 
refusal  of  the  owner  to  comply  with  his  part  of  the  agreement.7 

There  can  be  no  doubt  of  the  correctness  of  such  proposition, 
for  in  such  case  the  negotiation  passes  beyond  the  option  stage  and 
the  broker  has,  in  fact,  produced  a  purchaser  ready,  willing,  and 
able  to  purchase  on  the  employer's  terms. 

Add  to  footnote  If: 

Duncan  v.   Parker.  142  Pac.   (Wash.)   657  (1914). 

Add  to  footnote  16  (p.  159): 

Worthington  v.  McGarry,  149  Ala.  251;  42  So.  988  (1907). 

§150.     Change  of  Mind  by  Vendor  (p.  159) 

When  the  broker  has  procured  a  willing  and  able  purchaser, 
who  assents  to  all  the  terms  which  the  vendor  has  prescribed  to 
the  broker,  the  broker  cannot  be  deprived  of  his  commission  by 
the  vendor's  capricious  or  obstinate  insistence  upon  additional 


"McNamara  v.  Gregory,  211  N.  Y.  21;  105  N.  E.  78  (1914). 

"Warnekros  v.   Bowman,  128  Pac.   (Ariz.)  49;  43  L.  R.  A.    (N.S.)  91    (1912).     In  the 
note  to  this  case  in  43  L.  R.  A.  (N.  S.)  91,  many  authorities  are  cited. 
'Note  to  Warnekros  v.  Bowman,  in  43  L.  R.  A.  (N.  S.)  91  (1912). 


54 

and  unreasonable  provisions  to  be  inserted  in  the  contract  of  pur- 
chase. "In  such  a  case,  the  broker  has  done  all  that  the  vendor 
employed  him  to  do  and  all  that  he  undertook  to  do.  The  sale 
is  defeated  not  by  reason  of  any  lack  of  ability  or  willingness  on 
the  part  of  the  intending  purchaser,  or  any  refusal  on  his  part 
to  comply  with  the  terms  prescribed  by  the  vendor  to  the  broker, 
and  by  him  disclosed  to  the  buyer,  but  on  account  of  the  unrea- 
sonable imposition  of  new  terms  by  the  vendor.  The  broker's  claim 
to  compensation  cannot  thus  be  nullified." 8 

§  151.     Disclosure  of  Purchaser  (p.  159) 

Add  to  footnote  22  (p.  160) : 

See  §  130. 

Add  to  footnote  23  (p.  160): 

See   §§  96,  127a. 

§  153.     Financial  Ability  of  Purchaser  (p.  161) 

Where  the  sale  falls  through  because  of  the  refusal  of  the  vendor 
to  accept  the  proposed  purchaser,  the  broker,  in  order  to  recover 
commissions,  must  still  show  that  he  produced  a  purchaser  ready, 
willing,  and  able  to  purchase.9 

§  154.     When  Financial  Ability  of  Purchaser  Need  Not 
be  Shown  (p.  162) 

"When  an  agent  brings  to  a  principal  a  purchaser  for  his 
property,  and  the  principal  enters  into  a  contract  of  his  own  making 
with  the  purchaser  so  furnished,  then  the  rule  is  that  such  principal 
has  accepted  the  purchaser  so  found  by  the  agent,  and  the  agent's 
commission  is  then  due,  although  it  may  afterward  turn  out  that 
the  customer  was  not  financially  able  to  buy."  10 

"The  ground  on  which  this  is  settled  is  that  by  entering  into  a 
valid  contract  with  the  customer  produced  by  the  broker  the  prin- 
cipal accepts  the  customer  as  able,  ready  and  willing  to  buy  the 
land  and  pay  for  it."11 

The  general  rule  prevailing  in  regard  to  the  broker's  right  to 

"Davidson  v.  Stocky,  202  N.  Y.  423;  95  N.  E.  753   (1911). 

•Mott  v.  Minor  (Cal.  App.),  106  Pac.  244  (1909). 

10Knisely  v.  Leathe,  178  S.  W.  (Mo.)  453  (1915);  Coleman  v.  Meade,  13  Bush.  (Ky.) 
358;  Donohue  v.  Flanagan,  9  N.  Y.  Suppl.  273;  Roche  v.  Smith.  176  Mass.  597:  58  N.  E. 
153;  51  L.  R.  A.  510;  79  Am.  St.  Rep.  345;  Francis  v.  Baker,  45  Minn.  83;  47  N.  W.  452; 
\Vray  v.  Carpenter,  16  Colo.  271;  27  Pac.  248;  25  Am.  St.  Rep.  265;  Lockwood  v.  Halsey, 
41  Kan.  166;  21  Pac.  98;  Springer  v.  Orr,  82  111.  App.  558;  Love  v.  Miller,  53  Ind.  294; 
21  Am.  Rep.  192;  cf.  Riggs  v.  Turnbull,  105  Md.  135. 

"Roche  v.  Smith,  176  Mass.  loc.  cit.  597;  58  N.  E.  153;  51  L.  R.  A.  510;  79  Am.  St. 
Rep.  345. 


AVAILABILITY   OF   PURCHASER  55 

commissions  where  the  purchaser  procured  by  him  is  financially 
unable  to  perform  his  contract,  is  that  the  owner  of  real  estate 
who  employs  a  broker  to  negotiate  the  sale  of  his  land  cannot 
escape  paying  the  broker's  commission  on  the  ground  that  the 
customer  produced  by  the  broker  was  not  able  to  pay  for  the  land, 
where  he  had  accepted  the  purchaser  as  satisfactory  and  conveyed 
the  premises  to  him.  The  broker  undertakes  to  bring  the  minds  of 
the  seller  and  buyer  together  in  an  agreement  to  sell  and  purchase, 
wherein  the  price  and  terms  should  be  satisfactory  to  both,  and 
there  can  be  no  more  conclusive  evidence  that  he  has  done  this, 
than  the  execution  and  delivery  of  the  deed  to  the  land  by  the 
seller  to  the  purchaser.12 

"Following  this  doctrine,  it  has  been  held  that  the  broker,  under 
a  general  contract  of  employment  for  the  sale  of  real  estate,  is 
entitled  to  his  commission  where  he  produces  a  purchaser  satis- 
factory to  his  principal,  and  with  whom  the  principal  makes  an 
enforcible  contract  of  purchase  and  sale  without  being  induced  so 
to  do  by  any  representation  of  the  broker  as  to  the  ability  of  the 
proposed  purchaser  to  perform  the  contract,  and  without  any  bad 
faith  on  the  part  of  the  broker,  although,  without  any  fault  of  the 
principal,  the  vendor  afterward  fails  to  perform  the  contract,  solely 
because  of  the  lack  of  sufficient  financial  responsibility  at  the  time 
of  the  making  of  the  contract."  13 

An  early  case  in  Kansas11  to  the  contrary  effect,  was  disapproved 
when  the  case  was  again  before  the  court.15 

The  doctrine  above  stated  does  not  apply  where  the  broker  as 
a  part  of  his  employment  assumes  to  execute  for  his  principal  an 
executory  contract  of  sale.  Under  such  circumstances,  he  is  not 
entitled  to  his  commission  unless  the  other  contracting  party 
is  able  to  perform  the  contract  on  his  part.16 

This  is,  obviously,  on  the  theory  that  where  the  principal  him- 
self enters  into  and  executes  the  contract,  he  has  thereby  made  his 
choice  of  personally  accepting  the  purchaser  and  has  thus  himself 


"Van   Varick   v.    Suburban   Inv.    Co..  76  Misc.   593;   135  N.   Y.    Suppl.  299    (1912); 
Travis  v.  Graham,  23  App.   Div.   214;  48  NY  -Suppl  -736 

"Van  Varick  v.  Surburhan  Inv.  Co.,  76  Misc.  593;  1.!  NY.  Suppl.  X 
Alt  v  Doscher,  102  App.  Div.  344;  92  N.  Y.  Suppl.  439;  affd  on  opinion  of  the 
towJ' court  in  186  N.  Y.  566;  79  N.  E.  1100;  Brady  v.  Foster,  72  App.  D.V  416-  75 
Vr  v  «5nWf>1  994-  Heinrich  v  Korn  4  Daly  74:  Wrav  v.  Carpenter,  16  Colo.  271; 
2/pIc  liftTm.  St"  Rep  265 ;  Shainwald  7.  Cady,  92  Cal.  83;  »  Pac  101;  Parker  v 
Fstabrook  68  N  H.  349;  44  Atl.  484;  Hancock  v.  Dodge  85  Miss.  228;  37  So  711; 
Morgan  v.  Keller,  194  Mo.  663,  680;  92  S.  W  75;  Crane  v  Eddy,  191  111.  645;  61  N  E 
431 -85  Am  St  Rep  284;  Bankers  Loan  Investment  Co.  v.  Spindle,  N  S  Va.  425: 
62  S  E  266;  Green  v.  Hollingshead,  40  111.  App.  195. 

"Stewart  v    Fowler,  37  Kan.  677;  15  Pac.  918. 

"/vVvSck'v^S^Sban^nvestment   Co      71 >   Misc    593;    135    N.    Y.    Suppl.   299 
(1912)  ;  Inge  v.  McCreery,  60  App.  Div.  557;  69  N.  Y.  Suppl.  1052. 


56  COMMISSIONS    AND    THEIR   RECOVERY 

passed  upon  the  financial  responsibility  and  the  acceptability  of  the 
purchaser,  whereas  when  the  broker  has  entered  into  and  executed 
the  contract  on  behalf  of  his  principal,  the  broker  assumes  to  take 
the  responsibility  of  the  financial  ability  and  other  ability  of  the 
purchaser  to  carry  out  the  contract. 

Add  to  footnote  37  (p.  163) : 

Bailey  v.  Padgett,  70  So.  (Ala.)  637  (1915). 

§  155.     Burden  of  Proof  as  to  Financial  Ability  of  Pur- 
chaser (p.  164) 

It  is  intimated  that  testimony  as  to  the  purchaser's  reputation 
for  financial  ability  is  competent,"  as  also  testimony  as  to  the  char- 
acter and  magnitude  of  the  financial  institutions  with  which  the 
purchaser  is  connected.17  And  so  it  is  said  that  slight  evidence  of 
the  financial  ability  of  the  proposed  purchaser  is  sufficient,  and  that 
this  would  be  especially  true  where  the  vendor  has  not  based  his 
failure  to  complete  upon  the  purchaser's  inability  to  pay.18 


"Hutchinson  v.  Plant,  218  Mass.  148;  105  N.  E.  1017  (1914). 
18See  Bailey  v.  Padgett,  70  So.  (Ala.)  637  (1915). 


CHAPTER  XV 
TRANSACTION   MUST  BE  COMPLETE 

§     157.       What     Constitutes    a    Completed     Transaction 

(p.  166) 

Add  to  footnote  1: 

Chenkin  v.  Lipman,  138  App.  Div.  267;  122  N.  Y.  Suppl.  1083  (1910). 

§  158.     General  Rule  as  to  Completeness  of  Transaction 

(p.  167) 

Add  to  footnote  4- 

Backer  v.  Ratkowsky,  137  App.  Div.  564;  122  N.  Y.  Suppl.  225  (1910).    Sec 
also  §  167. 

§   163.     Options  and  "Alternative"  Contracts   (p.   171) 

A  broker  who  produces  a  written  contract  of  a  proposed,  pur- 
chaser is  not  entitled  to  commissions  if  such  proposed  contract, 
although  embodying  all  the  terms  of  the  vendor,  also  contains  a 
clause  that  if  the  buyer  fails  or  refuses  to  perform  his  part  of 
the  contract  of  purchase,  the  deposit  of  $100  shall  be  forfeited  as 
liquidated  damages,  and  the  vendor  refuses  to  accept  such  contract. 
The  proposed  written  contract,  being  in  such  case  the  only  offer 
cf  the  purchaser,  does  not  meet  the  vendor's  terms,  inasmuch  as  it 
imposes  a  new  term,  i.  e.,  the  forfeit  of  $100  as  liquidated  damages.1 

Add  to  footnote  30  (p.  172)  before  "But  sec": 

Anderson  v.  Jackson,   (Tex.  Civ.  App.)   168  S.  W.  54  (1914). 


'Cavanaugh  v.  Conway,  36  R.  I.  571;  90  All.  1080  (1914). 


57 


CHAPTER  XVI 
FAILURE  OF  PRINCIPAL  TO  COMPLETE 

§  167.     General  Rule  as  to  Failure  of  Principal  to  Com- 
plete (p.  176) 

/x'Tne  principal  may  not  defeat  the  broker's   right  to  an   earned 
commission  by  capricious  refusal  to  accept  the  purchase.1 

The  broker  having  produced  a  purchaser  willing  and  able  to 
accept  the  terms  of  the,  principal,  has  earned  his  commission,  and 
the  refusal  of  the  vendor  to  complete  the  bargain  cannot  destroy 
the  broker's  right  to  the  commission.2  Nor  may  the  owner  defeat 
the  broker's  earned  commission  by  mutually  rescinding  the  contract 
of  purchase  with  the  purchaser.3 

It  has  been  said  that  though  the  vendor  expressed  himself  as 
satisfied  with  the  proposition  made  by  the  customer  produced  by 
the  broker,  such  expression  of  satisfaction  could  not  fairly  be  said 
to  be  such  an  acceptance  of  the  proposed  customer  as  bound  the 
vendor  to  make  the  contract  of  sale,  or  rendered  him  liable  to  pay 
the  broker's  commission  for  such  transaction,  if  for  any  reason 
the  subsequent  negotiations  fell  through  and  no  contract  was  made.4 

Add  to  footnote  8: 

Tanenbaum   v.    Boehm,   202    N.    Y.    293;    95    N.    E.    708    (1911);   Tull    v. 
Starmer,  188  Mo.  App.  713;  176  S.  W.  511  (1915).     See  §§  158,  177,  187,  191. 

Add  to  footnote  9: 

As  to  broker's  right  to  recover  from  vendor  commissions  promised  by 
purchaser,  when  vendor  refuses  to  convey,  see  cases  under  §  334. 

Add  to  footnote  7  (p.  177) : 

See  also  §  116,  footnote  14. 

§  168.     Defective  Title  as  Cause  of  Failure  (p.  177) 

\/"\i  from  a  defect  in  the  title  of  the  vendor  a  sale  falls  through, 
nevertheless  the  broker  is  entitled  to  his  commission  for  the  simple 


'Handley   v.    Shaffer,   177  Ala.   636;   59   So.   286;   Bailey   v.   Padgett,   70   So.    (Ala.) 
637    (1915). 

'Beougher  v.   Clark,  81   Kan.  250;  106  Pac.  39   (1910). 

'Harrington  Co.  v.  Rose  Conser.,  222  Mass.  372;  111  N.  E.  37  (1916).     See  also  §  172. 

'Backer  v.  Ratkowsky,  137  App.  Div.  565;  122  N,  Y.  Suppl.  225  (1910). 

58 


FAILURE    OF    I'KINTIPAL   TO   COM  I'l.KTK  59 

reason  that  he  has  performed  his  contract.     The  contract  between 
the  parties  must  be  fairly  and  justly  construct:. 

Add  to  footnote  11: 

O'Reilly  v.  Cryer,  (Tex.  Civ.  .App.)  175  S.  W.  773  (1915). 

Add  to  footnote  12: 

But  where  the  seller's  broker  knew  that  the  title  was  defective  and  the 
seller  had  agreed  with  the  broker  to  cure  the  defect  before  contract,  the 
broker  would  not  lose  his  commission  upon  producing  a  purchaser,  who 
refused  to  take  the  defective  title  which  the  seller  had  omitted  to  cure. 
McGowan  v.  Eubank,  (Tex.  Civ.  App.)  177  S.  W.  512  (1915). 

On  page  17S,  after  "consummated  the  sale"  add: 

Reeder  v.  Epps,  166  S.  W.   (Ark.)   7-47   (1914). 

§  170.     Special  Causes  of  Failure  (p.  179) 

All  the  terms  of  a  trade  having  been  agreed  upon,  the  vendor 
cannot  escape  payment  of  commissions  by  asserting,  as  an  excuse 
for  his  failure  to  consummate  the  trade,  that  the  terms  of  a  mort- 
gage which  he  was  to  take  in  part  payment  of  the  price,  had  not 
all  been  agreed  upon.6 

"When  a  party  gives  a  reason  for  his  conduct  and  decision  touch- 
ing anything  involved  in  the  controversy,  he  is  estopped,  after 
litigation  is  begun,  from  changing  his  ground,  and  putting  his 
conduct  on  another  and  different  consideration."7 


-Tyler  v.  Seiler,  76  Misc.  185;  136  N.  Y.  Suppl.  394  (1912). 

"Sheridan  v.  McLaughlin,  172  App.  Div,  314;  158  N.  Y.  Suppl.  406  (1916).     See  also 
§   159. 

•Snyder  v.  Supreme  Ruler,  etc.,  122  Tenn.  248;  122  S.  W.  981   (1909). 


CHAPTER  XVII 
FAILURE  OF  CUSTOMER  TO  COMPLETE 

§  172.  General  Rule  as  to  Failure  of  Customer  (p.  181) 
^-ft  is  even  intimated  that  where  a  purchaser  refuses  to  complete 
his  contract,  and  the  vendor  does  not  compel  the  performance  of 
the  contract,  the  broker  can  sue  the  purchaser  to  compel  per- 
formance, on  the  theory  that  an  agent  having  an  interest  in  the 
contract  such  as  his  commissions,  can  sue  to  compel  performance.1 

:to  footnote  2  (p.  182): 
Croak  v.  Trentman,  150  Pac.   (Okla.)   1088   (1915). 
ien  a  broker,  as  a  part  of  his  employment,  assumes  to  execute 
for  his  principal  an  executory  contract  of  sale  or  exchange  he  does 
not  become   entitled  to  his  commissions   unless   the   other   contract- 
ing party  is  able  to  perform  the  contract  on  his  part."  2 
Add  to  -footnote  3: 

Bird  v.  Rowell,  180  Mo.  App.  421;  167  S.  W.  1172. 

§  173.     Abandonment  of  Broker  by  Customer  (p.  182) 
Add  to  footnote  6: 

Lord   v.   U.    S.   Transportation   Co.,   143   App.    Div.  437,   456;   128   N.   Y. 
Suppl.  451  (1911). 

§  174.     Misrepresentations  by  Vendor  (p.  183) 

Where  in  an  action  by  real  estate  brokers  to  recover  commissions 
under  an  employment  to  procure  a  purchaser  for  the  defendant's 
building,  the  defendant  furnished  to  the  plaintiffs  a  statement  as  to 
the  number  of  apartments  in  the  building  to  be  sold  and  the  sum 
for  which  they  were  separately  rented,  to  be  used  in  procuring  a 
purchaser;  and  the  plaintiffs  procured  persons  to  sign  a  contract 
to  purchase  in  reliance  upon  such  statement,  and  they  refused  to 
complete  the  purchase  because  of  misrepresentations  in  the  state- 
ment, a  judgment  for  the  plaintiffs  should  be  affirmed.3 

It  is  the  broker's  "duty  to  inquire  as  to  terms  of  sale  and  as  to 
matters  affecting  the  general  character  of  the  property.  There  is 


'Cordozo  v.  Middle  Atl.  I.  Co.,   (Va.  App.)  80  S.  E.  80  (1914). 

2Ka11ey  v.    Baker,   132  N.   Y.    1;   29   N.   E.   1091;  28  Am.    St.    Rep.   542   (1892).     See 
also  Van  Varick  v.  Suburban  Invest.  Co.,  76  Misc.  593;  135  N.  Y.  Suppl.  299  (1912). 
"Schweid  v.  Storandt,  157  App.  Div.  855;  143  N.  Y.  Suppl.  161   (1913). 

60 


FAILURE    OF    CUSTOMER   TO    COMPLKTi:  61 

no  duty  on  the  part  of  a  real  estate  owner  to  inform  a  broker  of 
encroachments  unless  he  is  asked  about  them.  It  is  not  misrepre- 
sentation, either  wilful  or  inadvertent,  for  him  to  remain  mute,  when 
he  is  not  asked,  and  when  he  is  under  no  duty  to  volunteer  or  speak."4 

Add  to  footnote  7: 

Huu-liinson   v.  Plant,  218  Mass.   148;  105   N.   E.   1017   (1914). 


4Wiggins  v.   Estate  of  Coddington,  83  Misc.  439,  441;  145   N.   Y.   Suppl.  3   (1913). 


CHAPTER  XVIII 
COMMISSIONS  ON  EXCHANGES  OF  PROPERTY 

§  177.     Commissions  on  Exchanges  (p.  186) 

It  is  said  that  in  the  case  of  an  exchange,  the  right  of  the 
broker  to  commissions  depends  upon  showing  that  the  parties  actually 
reached  an  agreement  as  to  all  the  details  of  the  proposed  exchange, 
or  that  he1  produced  a  party  who  was  able,  ready,  and  willing  to 
exchange  on  terms  which  the  employer  had  stated  to  the  broker 
would  be  satisfactory.1 

"To  entitle  a  broker  to  compensation  upon  a  proposed  exchange 
of  property,  he  must  show  that,  after  the  terms  of  the  exchange 
had  been  agreed  upon,  the  client  refused  to  carry  them  out.  This 
does  not  mean  that  the  client,  having  agreed  upon  some  of  the 
terms  discussed,  may  not  change  his  position  regarding  some  element 
discussed  during  the  conference,  or  introduce  other  terms  essential 
to  the  making  of  a  final  contract  at  the  risk  of  paying  a  broker's 


commission. 


»2 


Add  to  footnote  6: 

Brilliant  v.  Samelas.  221  Mass.  302;  108  N.  E.  10-17  (1915). 


§    179.      Authority  to  Sell   Does   Not   Give  Authority  to 
Exchange    (p.    187) 

"A  power  to  sell  or  to  convey  would  not  carry  with  it  a  power 
to  exchange.  Where  powers  are  granted  by  a  principal  to  an  agent 
in  a  general  language,  it  is  the  rule  that  such  powers  may  be  implied 
as  are  indispensable  to  the  exercise  of  the  grant  of  general  powers. 
But  this  rule  does  not  go  to  the  extent  of  an  implication  of  a 
power  which  may  be,  in  a  given  case,  convenient  though  not 
indispensable."  3 

§  191.     Rule  When  Contract  Has  Been  Executed  (p.  187) 

y^Yhere  the  broker  has  procured  an  enforcible  contract  of  exchange 
to  be  made,  it  is  immaterial  that  the  contract  was  never  performed 


'Davis  v.  Gottschalk,  80  Misc.  530,  531;  141  N.  Y.  Suppl.  517  (1913). 
-Id.,  80  Misc.  530,  533;  141  N.  Y.  Suppl.  517.  See  also  §§  158,  167. 
*Forman  v.  Berry,  163  App.  Div.  594;  148  N.  Y.  Suppl.  959  (1914). 

62 


COMMISSIONS   ON    EXCHANGES   OF   PROPERTY  63 

or  that  one  of  the  parties  was  not  in  a  position  to  perform  it.4 
Where  in  an  action  by  a  real  estate  broker  to  recover  commis- 
sions for  procuring  an  exchange  of  lands  it  appears  that  the  plaintiff 
procured  a  party  with  whom  the  defendant  entered  into  a  contract, 
it  is  error  to  dismiss  the  complaint  on  the  merits  upon  the  theory 
that  the  plaintiff  had  failed  to  establish  that  the  party  with  whom 
the  defendant  contracted  was  the  attorney  in  fact  of  the  owner  of 
the  land  he  contracted  to  exchange  as  he  had  represented  himself 
to  be  when  he  signed  the  contract.  The  defendant,  having  decided 
to  enter  into  a  contract  with  knowledge  that  the  other  party  claimed 
to  be  only  the  attorney  in  fact  of  the  owner,  thereby  relieved  the 
plaintiff  from  responsibility  in  that  respect.5 

By  an  agreement  between  a  broker  and  the  owner  of  real  property 
that  the  broker  shall  have  a  commission  of  $350  for  effecting  an 
exchange  of  properties,  but  that,  if  the  owner  of  the  other  property 
refuses  to  take  title  and  pay  the  consideration,  the  total  commission 
is  to  be  $100  only,  a  refusal  to  take  title  pursuant  to  the  terms  of 
the  contract  for  the  exchange  of  the  properties  is  intended  and  not 
a  refusal  because  the  owner  making  the  agreement  is  unable  to  carry 
out  the  contract.6 

§  182.    Reason  for  Rule  (p.  189) 

In  Backer  v.  Ratkowsky,7  it  was  said:  "A  person  is  not  bound 
to  enter  into  a  contract  which  the  other  party  to  the  contract  is 
not  then  able  to  perform  merely  because  the  other  party  expects  to 
be  able  or  is  willing  to  obligate  himself  to  perform.  It  seems  to  me 
there  must  be  presented  to  entitle  a  broker  to  commissions  a  customer 
who  is-  capable  of  carrying  out  the  contract  at  the  time  that  it  is 
proposed  that  one  be  executed." 

§  183.     Rule  as  Affected  by  Broker's  Bad  Faith  (p.  191) 

Where  the  broker  knows  that  one  of  the  contracting  parties  is 
without  title,  and  conceals  that  fact  from  his  employer,  he  cannot 
recover  commissions  although  a  contract  for  the  exchange  of 
properties  was  actually  entered  into,  where  it  was  not  carried  out 
because  the  other  party  to  tin-  exchange  contract  with  the  broker's 
employer,  had  no  title.8 

«Slocum  v.    Ostrander.   141   App.   Div    380;   126  N    Y    Suppl.   219(^0);  affd.,  205 
N.   Y.   617;  citing  Alt  v.   Doscher,  102  App     I)iy.  344;  92  N.   Y.   SupP'-  «*•  aot %- 
N.  Y.  566;  79  N    E.  1100;  Kalley  v.  Baker    132  N.  Y    1;  29  N.  E    1091    28  Am.  St.  R 
542  (1892).     See  also  Brilliant  v.   Samclas    221  Mass    302;  10    N    E    1047  ( 

'Callister  v.  Wichern,  147  App.  Div.  14;  131  N.  Y.  Suppl.  «"<»">• 

•Freilich  v.  Tucker,  68  Misc.  318;  123  N.  Y.  Suppl.  78 

M37  App.  Div.  564;  122  N.   Y.   Suppl    225   (1910). 

•Wiley  v.  Krasloc  Construction  Co.,  141  App.  Div.  706;  12 


CHAPTER    XIX 
COMMISSIONS  ON  LOANS 

§  186.     New  York  Rule  (p.  194) 

"It  has  been  settled  by  repeated  decisions  of  this  court  that 
where  a  broker  is  employed  to  find  a  purchaser  for  real  estate,  and 
procures  one  ready,  able  and  willing  to  pay,  he  is  entitled  to  his 
commissions  although  the  sale  is  prevented  by  defects  in  the  vendor's 
title.  In  the  last  case  cited,1  Judge  Earl  stated  the  law  as  follows : 
'Where  the  contract  of  sale  is  executed  between  the  employer  and 
the  purchaser,  the  right  of  the  broker  to  his  commissions  does  not 
depend  upon  the  performance  of  the  contract  by  the  purchaser.  If 
from  a  defect  in  the  title  of  the  vendor,  or  from  a  refusal  to  con- 
summate the  contract  on  the  part  of  the  purchaser  for  any  reason 
in  no  way  attributable  to  the  broker,  the  sale  falls  through,  never- 
theless the  broker  is  entitled  to  his  commissions,  for  the  simple 
reason  that  he  has  performed  his  contract.' 

"We  perceive  no  distinction  in  principle  between  such  a  case 
and  one  where  a  broker  agrees  to  procure  a  loan  and  completes  on 
his.  part,  but  the  loan  is  never  consummated  because  the  intend- 
ing borrower  cannot  furnish  the  agreed  security.  In  both  cases  the 
broker  has  done  all  that  he  could.  He  has  rendered  the  stipulated 
service  and  it  is  through  no  fault  of  his  that  the  matter  is  never 
completed.  In  both  cases  the  efforts  of  the  broker  are  rendered 
futile  by  the  fault  or  misfortune  of  the  employer,  and  under  such 
circumstances  the  employer  ought  not  to  be  heard  to  say  that  the 
broker  has  not  performed.  It  is  a  familiar  principle  that  one  can- 
not avail  himself  of  the  failure  to  observe  a  condition  precedent  who 
has  himself  occasioned  its  non-performance;  and  it  has  been  applied 
by  the  English  courts  to  several  cases  where  it  was  held  that  the 
broker,  under  circumstances  not  essentially  different  from  those  at 
bar,  was  entitled  to  his  commissions.2  This  view  accords  with  the 
decisions  in  this  state  upon  the  subject."  3 

While  it  has  been  said  that  "the  physical  production  of  a  lender 
is  not  necessary  if,  as  a  matter  of  fact,  there  is  a  lender  able  and 


'Gilder  v.  Davis.  137  N.   Y.  504. 

"Green  v.   Lucas,  33  Law  Times  R.   (N.  S.)   584;   Fisher  v.   Drewett,  39  Law  Times 
R.  253. 

'Smith  v.  Peyrot,  201  N.  Y.  210.  214;  94  N.  E.  662  (1911). 

64 


COMMISSIONS    ON    LOANS  65 

willing  to  loan,"4  it  has  also  been  said  that  "procuring  an  agree- 
ment from  a  third  person  to  make  a  loan  is  not  the  same  thing  as 
procuring  a  loan."  3 

It  has  also  been  said  that  the  burden  is  upon  the  broker  of  show- 
ing; that  he  had  procured  a  customer  ready,  able,  and  willing  to 
make  the  loan  on  the  terms  upon  which  he  was  authorized  to  pro- 
cure it,  so  that  if  the  principal  had  not  refused  to  proceed,  he  would 
have  received  the  loan  of  money  as  desired  unconditionally  then 
and  there,  if,  indeed,  an  actual  tender  and  rejection  of  the  loan  is 
not  essential.6 

Where  no  time  is  fixed  within  which  the  broker  is  to  procure  a 
loan,  a  reasonable  time  is  implied.7 

\Yhere  a  broker  employed  to  procure  a  loan  on  or  before  a  certain 
date  does  not  establish  that  he  procured  the  loan,  or  was  prevented 
by  his  employer  from  so  doing,  before  the  expiration  of  the  time 
limit,  he  is  not  entitled  to  recover  his  commission ;  that  on  the  last 
day  he  had  procured  an  agreement  with  a  third  person  to  make 
the  loan  is  insufficient.8  It  would  appear  that  the  money  must  be 
actually  advanced  by  the  lender  within  the  stipulated  time.9 

Where  brokers,  employed  to  procure  from  a  title  company  its 
acceptance  of  an  assignment  of  a  first  mortgage  as  security  for  a 
loan,  secure  merely  an  acceptance  subject  to  the  requirements  and 
regulations  of  the  title  company,  they  are  not  entitled  to  commissions.10 

In  Holman  v.  Patten,11  the  broker  sued  the  owner  for  commissions 
for  procuring  the  loan,  claiming  that  the  loan  was  not  made  because 
of  the  fault  of  the  owner.  The  loan  agreement  provided  that  the 
borrower,  the  owner,  was  to  furnish  a  policy  of  title  insurance  from 
one  of  two  named  title  insurance  companies,  showing  that  the 
owner's  title  was  a  marketable  one.  The  title  company  gave  as  an 
objection  to  the  title  that  there  was  an  outstanding  interest  in  land 
"lying  east  of  the  original  high  water  mark  of  the  Harlem  River." 
It  did  not  refuse  to  issue  a  policy  but  was  willing  to  do  so  with 
that  exception,  which  was  held  to  be  frivolous.  It  was  held  that 
the  borrower  was  not  at  fault,  but  that  the  broker  failed  to  make 
out  a  case  in  that  the  person  he  produced  refused  to  make  the  loan 
although  the  title  was  good.  The  broker  made  no  attempt  to  establish 

»Van  Orden  v.  Simpson,  90  Misc.  322,  323;  153  N.  Y.  Suppl.  134  (1915). 
'Slawson  &  Hobbs  v.  Rafter.  76  Misc.  199;  134  N.  Y.  Suppl.  585  (1912). 
•Von   Bayer  v.    Ninigret   Mills  Co.,   164  App.    Div.   698.   703;   150  N.   Y.   Suppl.   291 
(1914). 

'Suearnian  v.  Fraser,  71  Misc.  416;  128  N.  Y.  Suppl.  718  (1911). 
"Slawson  &  Hobbs  v.  Rafter.  76  Misc.  199;  134  N.  Y.  Suppl.  585  (1912). 

"Sugarnian  v.  Reams.  84  Misc.  450;  146  N.  Y.  Suppl.  192  (1914). 
"170  App.   Div.  877;  156  N.  Y.  Suppl.  613  (l'>15). 


66  COMMISSIONS   AND    THEIE   KECOVEEY 

that  any  part  of  the  land  lay  east  of  the  original  line  of  the  high 
water  mark,  although  that  was  the  only  objection  contained  in  the 
report  of  the  title  company  which  was  considered  of  any 
consequence.12 

§  188.     The  Rule  in  Some  of  the  Other  States   (p.  196) 

In  the  fourth  line,  after  the  words  "upon  the  terms  proposed"  add 
footnote  lla  as  follows: 

Hughes  v.  Chung  Sun  Tung  Co.,  28  Cal.  App.  371;  154  Pac.  299  (1915); 
Maxon  v.  Jones,  128  Cal.  77;  60  Pac.  516. 

If  one  is  employed  by  another  to  find  a  third  party  who  will 
make  a  certain  loan  to  him,  and  such  employee  finds  a  third  party 
able,  willing,  and  ready  to  make  the  loan,  he  may  recover  the 
compensation  agreed  upon  for  the  service.13 

§  191.     Failure  to  Complete  on  Account  of  Defects,  etc. 

(p.  200) 

Where  a  person  makesi  an  agreement  with  a  broker  to  procure 
a  loan  for  the  former,  for  which  he  is  to  pay  the  broker,  and  the 
broker,  acting  in  behalf  of  such  person,  applies  to  a  title  company  for 
the  loan,  and  obtains  its  acceptance  by  the  company,  such  person  for 
whom  the  broker  acted  becomes  responsible  to  the  company  for  its 
charges.14 

An  agreement  by  a  husband  to  give  a  mortgage  is  not  binding  on 
his  wife,  and  does  not  affect  her  dower  right,  if  she  does  not 
join  in  the  agreement.15 

§  195.    Amount  of  Commissions  on  Loan  (p.  204) 

The  arrangement  most  advantageous  to  the  broker  or  attorney 
.representing  the  lender,  is  the  one  now  insisted  upon  by  the  various 
title  and  guarantee  companies;  namely,  the  borrower  must  sign  a 
written  memorandum  that  he  agrees  to  pay  a  fixed  amount  for 
procuring  the  loan,  for  examining  and  guaranteeing  or  securing  the 
guarantee  of  the  title  to  the  property,  to  the  lender,  drawing  and 


ult  does  not  appear  whether  the  title  company  was  the  proposed  lender.  Therefore 
it  is  difficult  to  say  whether  the  co_urt  meant  to  hold  that  as  the  title  company  was 
the  proposed  lender  it  was  wrong  in  refusing  to  loan  because  of  the  alleged  defect, 
or  whether  it  was  intended  to  hold,  a  third  party  being  the  lender,  that  notwithstanding 
the  exception  stated  by  the  title  company,  the  borrower  had  really  furnished  a  policy 
showing  that  the  title  was  marketable. 

"Bartlett  v.  Garrett,  188  Mo.  App.  144;  175  S.  W.  79  (1915). 

"Title  Guarantee  &  Trust  Co.  v.  Carroll,  145  App.  Div.  926;  129  N.  Y.  Suppl. 
919  (1911).  See  also  §  203. 

"Meixel  v.  Meixel,  161  App.  Div.  518;  146  N.  Y.  Suppl.  587  (1914).     See  also  §  116. 


COMMISSIONS   ON    LOANS  67 

recording  papers,  etc.,  and  that  this  amount  should  be  paid  whether 
the  loan  is  actually  made  or  not.16 

Statutes  of  some  states  restrict  the  exactions  of  sums  in  con- 
nection with  the  loan  of  money,  for  commissions,  examinations, 
renewals,  etc.,  when  the  security  offered  is  a  chattel  mortgage.  A 
discussion  of  that  subject  is,  however,  outside  of  the  scope  of  a 
work  relating  to  real  estate  brokers. 

A  statute  which  forbids  any  person  to  charge  more  than  a 
specified  percentage  of  brokerage  for  procuring  a  loan,  but  docs  not 
prescribe  any  penalty  for  its  violation,  does  not  render  void  a 
contract  for  a  greater  brokerage,  but  the  broker  can  recover  only 
the  statutory  amount.17 

Such  statutes  are  not  always  limited  to  brokers  engaged  in  the 
occupation  of  soliciting  and  procuring  loans,  but  apply  to  the 
character  of  the  services  rendered.  In  other  words,  the  statutes 
do  not  apply  to  persons  but  to  anyone  performing  brokerage  services 
of  the  kind  mentioned.18 


18See  Form  40a  post. 

"Buchanan  v.  Tilden,  18  App.  Div.  123;  45  N.  Y.  Suppl.  417  (1897). 

«/d.  Cf.   §  11. 


CHAPTER  XX 
COMMISSIONS  ON  LEASES 

§     197.       When    Broker's    Obligations    Are    Performed 

(p.  205) 

doctrine  of  the  cases  relating  to  sales  of  real  estate  is  equally 
able  to  those  of  leases  of  real  estate.1 

r    v— 

\S  A  real  estate  broker  may  recover  commissions  upon  the  rental 
reserved  in  a  lease  procured  by  him  although  the  lease  has  not 
been  actually  executed  by  the  parties,  if  they  have  made  a  valid 
and  binding  agreement  to  make  it.2 

Where  there  has  been  such  an  agreement  between  the  proposed 
tenant  and  the  broker's  employers  upon  the  essentials  of  a  contract 
of  lease  as  to  have  rendered  it  en  forcible  by  an  action,  the  broker 
has  earned  his  commissions,  and  the  requirement  of  the  Statute  of 
Frauds  that  the  agreement  must  be  evidenced  in  writing,  which 
might  be  pleaded  as  a  defense,  has  no  bearing  upon  the  question  of 
whether  the  broker  had  earned  his  commission.  That,  alone, 
depended  upon  whether  the  minds  of  the  parties  had  met  upon  an 
agreement  for  a  lease,  and  whether  the  broker  had  been  the 
procuring  cause.3 

Where  the  minds  of  the  parties  had,  in  fact,  met  in  agreement 
upon  the  essential  terms  and  conditions  of  a  lease,  and  the  subse- 
quent failure  to  consummate  it  formally  is  due  to  an  unreasonable 
demand  of  the  landlord,  the  broker  cannot  be  deprived  of  the  right  to 
his  commissions.4 

§  198.     General  Requirements  for  Recovery  of  Commis- 
sions (p.  206) 

/>/A.  real  estate  broker  becomes  entitled  to  a  commission  only  when 

ne  is  the  procuring  cause  of  the  lease  which  he  has  been  engaged 

to  negotiate.3 

Where  the  property  is  placed  in  the  hands  of  several  brokers  for 

the  purpose  of  securing  a  tenant,  the  owner  is  ordinarily  obligated 

'Tanenbaum  v.  Boehm,  202  N.  Y.  293;  95  N.  E.  708  (1911).     See  also  §  231. 
Guarantor  Realty  Corporation  v.    Barnum,   172  App.    Div.   9;   157   N.    Y.    Suppl.   911 
(1916). 

3Tanenbaum  v.  Boehm,  supra. 
*Tanenbaum  v.  Boehm,  supra. 
6Fox  v.  Cammeyer,  93  Misc.  180;  156  N.  Y.  Suppl.  1046  (1916). 

68 


COMMISSIONS   ON    LEASES  69 

to  pay  commissions  only  to  the  one  who  was  the  procuring  cause 
of  the  lease.6 

Where,  in  an  action  by  a  broker  to  recover  commissions  for  pro- 
curing a  lease  of  real  estate,  it  appears  that  the  plaintiff  only 
called  the  attention  of  an  agent  of  a  proposed  lessee  to  the  premises 
and  submitted  an  offer  to  make  a  lease  which  was  rejected,  and 
submitted  another  offer  made  by  defendants,  which  was  never 
accepted,  and  that  another  firm  of  brokers  procured  the  execution  of 
the  lease,  without  learning  of  the  property  or  of  the  lessee  through 
the  plaintiff,  he  is  not  entitled  to  recover.7 

A  real  estate  broker  employed  to  procure  a  tenant  able  and 
willing  to  pay  a  certain  yearly  rent  and  to  furnish  a  part  of  the 
cost  of  erecting  a  twelve-story  building  on  the  premises,  to  be  con- 
structed on  plans  to  be  mutually  agreed  upon  between  the  parties, 
cannot  recover  commissions  where  no  plans  for  a  twelve-story  build- 
ing were  ever  agreed  upon  and  a  contract  between  the  owner  and 
the  prospective  tenant  was  repudiated  by  the  owner  and  abandoned 
by  mutual  consent,  because  of  the  financial  inability  of  the  proposed 
tenant  to  perform  by  reason  of  the  fact  that  he  was  unable  to  satisfy 
judgments  for  large  amounts  entered  against  him.  Where  the  com- 
plaint in  such  action  alleges  that  the  owner  and  the  proposed  tenant 
were  to  agree  upon  the  plans  for  a  twelve-story  building,  it  is  error 
to  admit  evidence  that  the  owner  and  the  proposed  tenant  sub- 
sequently negotiated  as  to  the  erection  of  a  fifteen  and  one-half  or 
sixteen-story  building,  as  the  difference  in  the  proposed  terms  of 
the  lease  is  radical.8 

§   198a.      Commissions  on  Renewal  of  Lease    (p.  207) 

A  broker  who  procures  a  tenant  to  enter  into  a  lease  for  a 
term  of  years,  with  an  option  to  the  tenant  for  a  further  term,  is 
entitled  to  commissions  on  the  rental  for  the  term  of  the  lease,  but, 
it  seems,  not  upon  the  rental  for  the  optional  additional  term  unless 
the  broker  is  the  procuring  cause  of  having  the  tenant  exercise 
his  option  to  take  the  extended  term  also.  It  is  also  suggested  that 
although  the  owner  promises  to  pay  commissions  on  the  rental  for 
the  extended  term  the  broker  cannot  recover  if  the  extended  term 
is  not  to  begin  and  such  additional  commissions  are  not  to  be  paid 
until  after  the  expiration  of  an  original  term  of  more  than  a  year, 
unless  the  agreement  to  pay  is  in  writing.9 


"Thorpe  v.  Cameron,  191   III.  App.  455  (1915).     See  also  S  97. 
'Loewenthal  v.  Klein,  159  App.  Div.  334;  144  N.  Y.  Suppl.  593   (1913). 
"Head  note  in  Herron  v.  Cameron,  144  App.   Div.  4.?;  1JS  N.  V   Suppl.  871   (1911). 
»Allwin  Realty  Co.  v.   Barth,  161  App.  Div.  568;  146  N.  Y.   Suppl.  960   (1914).     See 
also   §  26. 


70  COMMISSIONS    AND    THEIR   RECOVERY 

§  202 a.      Commission  on  Sale  of  Leasehold   (p.  211) 

The  employment  of  a  broker  to  procure  a  purchaser  for  a  lease- 
hold interest  in  real  estate  may  be  proven,  either  by  oral  testimony 
or  by  a  writing,  and  the  contract  is  performed  when  the  broker 
procures  a  purchaser  ready,  able,  and  willing  to  take  the  property 
at  the  seller's  terms.  It  is  not  essential  to  a  recovery  that 
the  broker  should  prove  the  execution  of  a  written  contract  between 
the  owner  and  the  intending  purchaser.10 

10Wiederman  v.  Verschleiser,  95  Misc.  276;  159  N.  Y.  Suppl.  226  (1916).  See  opinion 
in  same  case  on  motion  in  trial  court  for  new  trial,  93  Misc.  (453). 


CHAPTER  XXI 
WHO  IS  LIABLE  FOR  COMMISSIONS 

204.      The   Employer   Is   Usually   Liable   for   Broker's 

Commissions   (p.  212) 

tenant  in  common  cannot  bind  the  other  in  the  employment 
of  a  broker  without  the  latter's  acquiescence,  nor  can  the  latter  be 
held  on  the  theory  of  ratification  unless  such  ratification  be  with 
full  knowledge  of  all  the  material  facts.11 

§  205.     Promises  to  Pay  Commissions   (p.  213) 

Add  to  footnote  8,  after  Bcllcshein  v.  Palm: 

Courtney  v.  Rhodes,  148  App.  Div.  799;  133  N.  Y.  Suppl.  363  (1912). 

§   206.      Liability  of  Persons   Not  Owning  the  Property 

(p.  214) 

A  person,  although  he  may  not  be  the  owner  of  the  property,  who 
deals  as  principal,  and  who  does  not  disclose  his  principal  until  after 
the  broker  has  produced  a  purchaser  ready  and  willing  to  purchase 
on  the  terms  fixed  by  such  person,  is  liable  for  the  commissions 
earned  by  the  broker.12 

Where  a  third  person  without  authority  from,  or  knowledge  of, 
the  owner  of  lands  employs  a  broker  to  procure  a  purchaser,  he 
is  personally  liable  to  the  broker  for  commissions  when  a  sale  is 
effected.  But  the  owner  himself  is  not  liable.13 

In  an  action  by  a  broker  to  recover  commissions  for  procuring 
a  purchaser  for  real  property,  testimony  by  defendant,  the  owner  of 
the  property,  that  her  husband  acted  for  her  and  handled  her 
property  entirely  and  absolutely,  is  sufficient  to  show  general  authority 
in  the  husband  to  employ  a  broker,  although  special  authority  to  do 
so  is  denied.14 

"\yhere  a  real  estate  broker  is  employed  to  procure  a  sale  of  real 


"Pretzfelder  v.  Strobel.  17  Misc.  152;  39  N.  Y.  Suppl.  333  (1896). 

"Taubenblatt  v.  Galewski,  108  N.  Y.  Suppl.  588  (Sup.  Ct.  App.  Term,  1908)  ;  Meeker 
v.  Claghorn,  44  N.  Y.  349;  Arfman  v.  Hare,  27  Misc.  777;  57  N.  Y.  Suppl.  759;  Rounds 
v.  Alice,  116  Iowa  345;  89  N.  W.  1098  (1902). 

"Kennon  v.  Poerschke,  148  App.  Div.  839;  133  N.  Y.  Suppl.  528  (1912). 

"Cannon  v.  Bannon,  151  App.  Div.  693;  136  N.  Y.  Suppl.  139  (1912);  Arnold  v. 
Loomis,  148  Pac.  (Cal.)  518  (1915);  cf.  Bierfcamp  v.  Beuthicn,  155  N.  W.  (low;.)  S19 
(1915). 

71 


72  COMMISSIONS    AND    THEIR    RECOVERY 

property  by  one  claiming  to  be  the  owner,  and  it  later  appears  that 
tnc  land  was  in  fact  owned  by  his  wife,  whose  agent  he  was,  it 
is  the  broker's  duty  after  learning  the  facts  to  elect  whether  he 
will  hold  the  husband  for  his  commissions  for  failure  to  disclose 
the  principal  or  whether  he  will  hold  the  wife  for  the  act  of  her 
agent.  When  the  facts  are  known  there  is  a  duty  to  elect,  and  an 
election  made  with  full  knowledge  of  the  facts  is  binding.  Where 
the  broker  although  knowing  the  facts  sues  both  husband  and  wife 
jointly  for  his  commissions,  a  judgment  entered  in  his  favor 
against  both  defendants  will  be  reversed.15 

"While  there  are  numerous  authorities  that  a  debtor  will  not  be 
held  to  have  made  an  election  in  favor  of  the  principal  where  he 
has  proceeded  against  the  agent  without  full  knowledge  of  the  facts, 
yet  the  weight  of  authority  both  in  England  and  in  this  country 
is  that  where  an  election  has  been  made  with  full  knowledge  of 
the  facts  it  is  controlling,  and  that  where  the  facts  are  known  there 
is  a  duty  to  elect."16 

When  a  lawyer  applies  to  a  title  company  for  a  search,  and 
discloses  that  he  is  acting  for  his  client  and  assumes  no  personal 
liability,  the  title  company  cannot  hold  the  lawyer  personally  for 
its  fees.17 

§  207.     Trustees,  Executors,  and  Guardians   (p.  217) 
At  end  of  first  paragraph  add  footnote  21a  as  follows: 

See  also  Matter  of  Bielby,  91  Misc.  353;  155  N.  Y.  Suppl.  133  (1915). 

Although  the  broker  knew  his  employer  was  assuming  to  act 
purely  as  executor,  the  action  may  properly  be  brought  against 
the  employer  personally.  The  latter  had  no  power  to  bind  the 
estate  by  such  a  contract.  "The  general  rule  is  well  settled  in  this 
state  that  executors  or  trustees  cannot,  by  their  executory  contracts, 
although  made  in  the  interest  and  for  the  benefit  of  the  estate  they 
represent,  if  made  upon  a  new  and  independent  consideration,  bind 
the  estate  and  thus  create  a  liability  not  founded  upon  the  contract 
or  obligation  of  the  testator."  18 

A  trustee  who  pays  a  commission  on  the  sale  of  the  real  estate 


«Cherrington  v.  Burchell.  147  App.  Div.  16;  131  N.  Y.  Suppl.  631  (1911);  Weil  v. 
Raymond,  142  Mass.  206;  Pittsburgh  Plate  Glass  Co.  v.  Roquemore,  88  S.  W.  449; 
Central  Lumber  &  Mfg.  Co.  v.  Reyburn  Co.,  189  Mo.  App.  405;  176  S.  W.  509  (1915). 

16Cherrington  v.   Burchell,  supra. 

"Title  Guarantee  &  Trust  Co.  v.  Sage,  146  App.  Div.  578;  131  N.  Y.  Suppl.  278 
(1911).  See  also  Echols  v.  Howard  (Ga.  App.)  86  S.  E.  91  (1915). 

"Smith  v.  Peyrot,  201  N.  Y.  210,  215;  94  N.  E.  662  (1911). 


WHO    IS    LIAIJI.K    KOK    COMMISSION.-  73 

of  the  trust  estate,  will  be  allowed  such  payment  on  the  settlement 
of  his  accounts.19  The  same  is  true  of  an  administrator.20 

But  such  amount  paid  for  broker's  commissions  should  be  charged 
against  the  principal  of  the  estate  if  there  are  persons  to  whom  the 
income  only  of  the  estate  is  directed  to  be  paid.-1 

Where  real  estate  is  devised  to  executors  under  a  good  trust 
and  they  are,  as  such  trustees,  directed  to  sell  the  same,  the  ques- 
tion arose  whether  an  amount  for  broker's  commissions,  though 
not  yet  incurred,  should  be  deducted  from  the  assets  of  the  estate 
in  arriving  at  the  net  amount  of  the  estate  for  the  purpose  of  impos- 
ing an  inheritance  tax.  An  able  judge  has  held  that,  if  it  shall 
appear  that  the  expenditure  for  broker's  commissions  is  reasonably 
to  be  required,  the  amount  thereof  should  be  deducted.  "The  sole 
question  is  whether  or  not  it  can  be  found  as  a  fact  that  the 
executors  are  about  to  incur  a  necessary  expense  on  the  sales  which 
they  may  be  required  to  make  under  the  will."  -- 

§  207a.     Corporations   (p.  218) 

Acts  clone  by  the  executive  officers  of  a  corporation  within  the 
apparent  scope  of  their  authority  in  the  regular  business  of  the 
corporation  are  assumed  to  be  its  acts,  and  one  dealing  with  such 
officers  is  not  required  to  prove  that  they  were  given  specific  authority 
from  the  board  of  directors.  But  where  a  corporation  is  engaged 
in  the  business  of  renting  lands,  the  sale  of  all  its  tangible  property 
is  not  within  the  apparent  scope  of  the  business,  and  one  seeking 
to  recover  commissions  for  procuring  a  purchaser  must  prove  either 
that  the  officers  were  given  authority  to  employ  him;  or  that  their 
act  was  subsequently  ratified.  And  thus  it  has  been  held  that, 
where  a  broker  suing  for  commissions  has  given  evidence  that  the 
officers  of  the  corporation,  acting  in  its  name,  employed  him  to 
find  a  purchaser  for  all  of  its  tangible  property  and  that  the 
property  was  actually  sold  to  a  customer  procured  by  him,  the 
burden  is  upon  the  defendant  to  show  that  its  officers  had  no 
authority  to  employ  the  plaintiff  and  that  the  act  of  the  officers  was 
not  ratified.23 

In  like  manner,  it  has  been  held  that  the  president  and  actual 
general  manager  of  a  corporation  engaged  in  selling  land  was  act- 

"-See  Matter  of  Odell,   164  App.   Div.  929;   149  N.   Y.   Suppl.  435   (1914);  affd.,  214 

'  »/n  re  Willard's  Estate.  139  Cal.  501;  73  Pac.  240;  64  L.  R.  A.  554  (1903);  sec  the 
net"  in  L.  R.  A.  last  cited;  cf.  Jacobs  v.  Jacobs,  99  Mo.  427;  12  S.  W.  457. 

^'Matter  of  FarRO,  72  Misc.  305;  125  N.  Y.   Suppl.  156  (1911). 

"Matter  of  Shields.  68  Misc.  264;   124  N.  Y.  Suppl.  1003  (1910). 

"Lyon  v.  West  Side  Transfer  Co.,  132  App.  Div.  777;  117  N.  Y.  Suppl.  648  (1909). 
Two  of  the  5  judges  dissented. 


74  COMMISSIONS   AND    THEIE   RECOVERY 

ing  within  the  scope  of  his  authority  in  employing  a  selling  agent, 
and  agreeing  that  the  corporation  would  pay  for  his  services,  though 
no  resolution  had  been  passed  appointing  him  general  manager.24 

But  where  the  directors  of  a  corporation  employed  a  broker  on 
the  express  condition  that  any  proposition  submitted  by  him  should 
be  approved  by  the  board  before  he  should  be  entitled  to  commission, 
there  can  be  no  recovery  of  commissions  in  the  absence  of  such 
approval.25 

Where  it  is  alleged  that  the  broker  was  hired  by  the  president  of 
a  corporation,  and  the  brokerage  employment  was  for  the  sale  of 
real  estate,  and  thus  related  to  a  transaction  entirely  outside  of  the 
scope  and  purposes  of  a  manufacturing  corporation,  the  president 
cannot  bind  the  corporation  for  the  broker's  services  simply  because 
he  was  its  executive  officer.  The  president's  authority  to  act  for 
the  corporation  is  limited  by  the  legitimate  scope  of  its  business  as 
defined  by  its  charter,  and  it  can  never  be  presumed  that  an  officer 
of  a  manufacturing  corporation  has  authority  to  transact  business 
which  the  corporation  itself  is  not  authorized  by  its  charter  to  trans- 
act, and  persons  dealing  with  a  corporation  are  bound  to  take  notice 
of  the  limitations  upon  the  powers  of  their  agents.  And  so,  should 
a  president  of  a  manufacturing  corporation  assume  to  make 
an  agreement  in  behalf  of  his  corporation  to  hire  brokers  to  sell 
his  individual  real  estate,  he  could  not  bind  the  corporation  by  such 
action,  for  it  is  not  within  the  apparent  scope  of  his  authority  as 
president  of  such  company.  Or  should  the  president  of  a  manu- 
facturing company  state  to  a  broker  that  certain  real  estate  belonged 
to  the  corporation,  there  would  still  be  no  ground  for  the  broker 
to  stand  upon,  for  it  is  not  within  the  apparent  authority  of  a  presi- 
dent of  a  manufacturing  corporation  to  sell  its  plant  and  machinery. 
If  a  plant  is  a  part  of  a  manufacturing  equipment  of  a  corporation, 
it  is  not  within  the  apparent  scope  of  the  authority  of  the  president 
of  the  company  to  sell  the  same,  and,  as  it  is  not,  there  can  be 
no  presumption  that  a  person  holding  the  office  of  president  is 
acting  for  a  corporation  in  hiring  a  broker  to  sell  the  same.26 

Where  an  employee  of  a  steamship  corporation  is  designated  as 
its  general  manager,  and  a  person  would  have  the  right  to  assume 
that  any  contract  with  respect  to  the  transportation  business  of  the 
company  was  within  the  authority  of  such  general  manager,27  yet 


"Hoffman  v.  Guy  M.  Rush  Co.,  (Cal.  App.)  149  Pac.  177  (1915). 

^Roberts  v.  New  &  Beaver  St.  Corp.,  138  App.  Div.  47;  122  N.  Y.  Suppl.  989  (1910). 

"McCorry  v.  Wiarda.  149  App.  Div.  863;  134  N.  Y.  Suppl.  667  (1912). 

"Citing  Rathbun  v.  Snow,  123  N.  Y.  343;  25  N.  E.  379;  10  L.  R.  A.  355;  Sistare  v. 
Best,  88  N.  Y.  527;  Norton  v.  Genesee  Nat.  Savings  Assn.,  57  App.  Div.  520;  68  N.  Y. 
Suppl.  32. 


WHO    IS    LIAMLK     FOB    'MM.  MISSIONS  75 

a  broker  would  have  no  right  to  assume  that  such  general  manager 
had  authority  to  employ  him  to  negotiate  a  sublease  of  a  lease  the 
corporation  held.-"8  The  question  is  not  with  respect  to  the  authority 
such  general  manager  assumed  to  exercise,  but  with  what  appear- 
ance of  authority  the  corporation  clothed  him.28  If  the  corporation, 
\\ith  knowledge  that  its  general  manager  employed  a  broker,  accepts 
a  customer  produced  by  him,  and  makes  a  contract  on  a  proposition 
which  he  was  authorized  to  submit,  it  would  be  bound  by  the  employ- 
ment on  the  theory  of  ratification,30  but  if  the  general  manager  is 
not  authorized  to  employ  a  broker,  the  corporation  is  not  chargeable 
with  any  knowledge  possessed  by  the  general  manager  and  not  com- 
municated to  any  officer  of  the  corporation  and  if  no  officer  ha? 
actual  knowledge,  the  corporation  cannot  be  held  on  the  theory  of 
ratification  for  having  accepted  the  fruits  of  the  broker's  services.31 

§  208.     Commissions  from  Purchaser  (p.  218) 

In  second  paragraph,  after  words,  "are  not  unusual,"  add  foot- 
note -'?</.• 

Roberts  v.  Martin  (Ga.  App.)  82  S.  E.  813  (1914). 

§  209.     Purchaser's  Promise  to  Pay  Commission  (p.  219) 

Add  to  footnote  81: 

Cf.  Urtz  v.  N.  Y.  C.  &  H.  R.  R.  Co..  202  N.  Y.  170;  95  N.  E.  711  (1911). 

§  210a.     Purchaser's  Liability  for  Commissions  on  Refusal 

to  Purchase   (p.  221) 

Refusal  to  comply  with  an  agreement  to  purchase  real  estate  by 
reason  of  which  the  broker  who  negotiated  the  sale  is  deprived  of 
his  commissions,  will  render  the  intending  purchaser  liable  for  the 
damages  thereby  inflicted  on  the  broker,  although  he  had  agreed 
to  look  to  the  seller  for  his  commissions.  32 

"It  would  seem  to  be  immaterial  whether  in  the  original  negotia- 

»Lord  v.  U.  S.  Transportation  Co.,  143  App.  Div.  437;  128  N.  ^.SuppIL  451  (1911); 
citing  Camacho  v.  Hamilton  Bank  Note  &  Eng  Co.  2  App  Div  .369;  N£  YjSu 

-^0  '  ' 


Ki  ;•  &fns!  s 

1085'-  Conn  Co  'v    L^e,  132  App  Div.  697;  117  N.  Y.  Suppl.  550;  Alexander  v.  Cauldwell, 
J  ^L^dn°:i]aT¥raVnsSiion^dVa,  citing  Hay  v    Platt,  66  Hun.  488,  491;  2, 


^  XlSrt:  ^l^^^e^^^Co^  .  MJJ. 
Co  56  How  Pr.  373;  affd.,  75  N.  Y.  601;  Smith  v.  Martin,  etc.  Co.,  47  N.  Y.  St.  Repr. 
26;  'l9  N.  Y.  Suppl.  285;  mem.  64  Hun  639. 

"Lord    v.    United    States   Transportation   Co.,   143   App.   Div.   437,   U 

451  -LiveVmore  v.  Crane.  26  Wash.  529;  67  Pac.  221;  57  L.  R.  A.  401  (1901);  Clark  & 
Skyles  on  Agency,  pp.  1696,  1697. 


76  COMMISSIONS    AND    THEIR   RECOVERY 

ation  or  the  sale  the  plaintiff  was  the  agent  of  the  vendor  or  the 
purchaser.  The  complaint  here  is  for  the  violation  of  the  contract 
to  purchase,  from  which  violation  damages  directly  result  to 
plaintiff."  33 

In  Hunter  v.  Lyons,34  this  doctrine  was  also  applied  to  an 
exchange,  and  it  was  there  held  that  where  both  parties  to  a 
trade  knew  of  and  assented  to  contracts  by  the  broker  for  com- 
missions from  both  of  them,  and  he  was  the  efficient  cause  of  the 
trade,  upon  a  refusal  by  one  of  the  parties  to  perform,  the  broker 
may  recover  from  him,  not  only  the  commission  which  he  con- 
tracted to  pay,  but  also  that  which  he  would  otherwise  have  received 
from  the  opposite  party.  It  was  also  said  that  it  is  not  essential 
that  the  party  so  to  be  held  should  know  the  amount  of  commission 
the  broker  was  to  receive  from  the  other  side  of  the  exchange,  it 
being  sufficient  to  charge  him  with  liability  if  he  knew  and  con- 
sented to  the  other  side's  agreeing  to  pay  some  commission  to  the 
broker. 

Yet  in  Le  Master  v.  Dalhart  Real  Estate  Agency,  35  it  was  said: 
"It  was  clearly  decided  by  our  Supreme  Court  on  writ  of  error  in 
Tinsley  v.  Dowell,36  that  a  mere  selling  agent  or  broker  has  no  such 
interest  in  a  contract  for  the  purchase  of  land  secured  by  him.  as 
authorizes  a  recovery  of  damages  in  the  way  of  lost  commissions 
from  the  proposed  purchaser  who  has  refused  to  comply  with  the 
contract.  To  the  same  effect  is  the  decision  in  the  case  of  Tinsley 
v.  Anderson,57  by  the  Court  of  Civil  Appeals  of  the  Fourth 
Judicial  District." 

In  Tinsley  v.  Dowell,38  it  appeared  that  the  broker  had  been 
authorized  to  sell  and  on  behalf  of  the  owners  had  entered  into  a 
contract  of  sale  with  the  purchaser,  and  the  court  said  that  the 
broker  had  no  such  interest  as  to  give  him  a  right  to  maintain  a 
suit  for  the  breach  of  the  contract  to  purchase  the  land,  and  that 
if  the  purchaser  refused  to  comply  with  his  contract  he  would  be 
liable  to  the  owner  for  the  damages.  The  court  advanced  general 
arguments  to  sustain  its  position  that  the  broker  could  not,  in  that 


33Livermore  v.  Crane,  supra.  In  this  case  an  agreement  in  wri^jng  had  actually 
been  made  between  purchaser  and  seller  and  a  deposit  paid  and  the  broker  was  to 
receive  his  commission  from  the  seller  from  time  to  time  as  various  payments  were 
to  be  made  on  the  contract  of  sale  by  the  purchaser.  While  in  some  states  a  broker 
is  not  entitled  to  his  commissions  until  he  brings  about  a  written  contract  between 
seller  and  purchaser,  that  doctrine  does  not  prevail  universally  and  the  broker  is 
generally  entitled  to  his  commissions  when  he  succeeds  in  having  the  minds  of  the 
parties  meet.  See  §  117. 

"(Tex.   Civ.   App.)   144  S.  W.  353   (1912). 

55  56  Tex.  Civ.  App.  302;  121  S.  W.  185   (1909). 

38  87  Tex.  23;  26  S.  W.  946. 

"33  S.  W    266. 

»87  Tex.  23;  26  S.  W.  946  (1894). 


\Vlfo    IS    I.IAUI.B   FOB    COMMISSIONS  77 

case,  recover  on  any  theory,  from  the  purchaser,  notwithstanding 
that  the  broker  had  an  interest  in  the  sale  to  the  extent  of  all  over 
a  minimum  price  which  the  owner  had  fixed. 

Tinsley  v.  Anderson,39  was  decided  on  the  authority  of  Tinsley 
v.  Dowell,  supra.  The  head  note  reads:  "Plaintiff,  who  was 
authorized  to  sell  certain  land  for  the  owners  (his  compensation  to 
he  any  excess  of  a  specified  price),  procured  a  written  offer  from 
defendant  to  purchase  the  same  at  a  price  in  advance  of  that  fixed 
by  the  owners;  but  defendant  refused  to  comply  with  his  contract, 
though  the  owners  of  the  land  executed  to  him  a  deed  thereof. 
There  was  nothing  to  indicate  that  the  land,  at  the  time  of  the 
default,  was  not  worth  the  sum  which  defendant  agreed  to  pay. 
Held,  not  to  show  any  relation  of  principal  and  agent,  so  as  to 
render  defendant  liable  for  the  difference  between  the  fixed  price 
and  the  amount  which  the  latter  agreed  to  pay." 

In  Donnelly  v.  Chetejian,40  it  was  held  that  the  intending  pur- 
chaser is  not  liable  for  commissions  where  before  acceptance  by 
the  seller,  the  proposed  purchaser  withdrew  his  offer  to  buy  land 
carried  by  the  broker  on  his  books  for  sale  for  the  owner,  no 
promise  or  word  with  reference  to  payment  of  commissions  by  the 
proposed  purchaser  being  shown. 

An  intending  purchaser  may,  of  course,  negotiate  for  the  pur- 
chase of  property,  and  if  he  finds  that  he  is  unable  to  purchase  on 
terms  wholly  satisfactory  to  himself,  he  may  abandon  the  negotia- 
tions whenever  he  wishes,  without  incurring  any  liability  for  the 
commissions  lost  by  the  broker. 

So  too,  if  the  broker  represents  the  seller  and  a  written  con- 
tract of  sale  is  entered  into  between  buyer  and  seller,  the  commissions 
would  be  due  from  the  seller,  and  no  liability  would  be  incurred 
by  the  purchaser  for  the  loss  of  any  commissions  if  the  purchaser 
refused  to  carry  out  his  contract  of  purchase.  In  such  case,  the 
broker,  having  brought  about  a  contract  of  sale,  is  undeniably 
entitled  to  his  commissions  from  the  seller  and  the  seller  could  enforce 
the  contract  of  sale  against  the  purchaser,  or  not,  just  as  he  chose. 

In  Hevia  v.  Wheelock,41  A  and  B  had  agreed  in  writing  to 
exchange  lands,  and,  before  delivery  or  exchange  of  deeds,  A 
employed  a  broker  to  procure  a  loan  on  the  property  to  be  con- 
veyed by  B  to  A.  B  subsequently  refused  to  carry  out  the 
contract  of  exchange.  It  was  said  that  the  broker  having  procured 
the  loan  could  recover  his  commissions  from  A,  but  the  broker 


38  33  S.  W.  266   (1895). 

"115  N.  Y.  Suppl.  125  (App.  Tt-rm,  1909). 

41  162  App.   Div.    759;    148   N.   Y.    Suppl.   165    (1914). 


78  COMMISSIONS    AND    THEIR   RECOVERY 

could  not  recover  the  amount  of  these  commissions  from  B  on  the 
theory  that  by  B's  refusal  to  carry  out  the  contract  for  exchange 
the  broker  was  prevented  from  earning  and  receiving  his  commis- 
sion. It  was  further  stated  that  A  on  suing  B  for  breach  of  his 
contract  of  exchange  could  probably  recover  as  an  item  of  damage, 
the  amount  A  paid  the  broker  for  procuring  the  loan,  providing 
the  agreement  with  the  broker  to  procure  the  loan  was  made  with 
the  knowledge  and  consent  of  B. 

As  to  B's  liability  to  the  broker  for  the  commissions  he  would 
have  been  paid  by  A  on  the  exchange  had  the  contract  been 
carried  out,  the  court  said  that  if  such  commissions  were  only  to 
be  paid  upon  the  consummation  of  the  exchange,  then  such  com- 
missions never  became  due  from  A.  If  they  did  become  due  when 
the  contract  for  exchange  was  executed,  B's  breach  of  the  contract 
with  A  would  not  absolve  A  from  the  payment  of  the  commission 
to  the  broker. 

While  the  authorities  on  this  subject  are  not  abundant,  yet  it 
is  difficult  to  draw  from  these  authorities  any  principle  which  may 
be  laid  down  as  general.  In  such  states  where  the  doctrine  pre- 
vails that  a  broker  is  not  entitled  to  commissions  until  he  has  pro- 
cured an  executed  contract,42  it  may  be  argued  that  in  no  case  could 
a  broker  have  a  cause  of  action  against  the  purchaser  for  the  com- 
missions lost  by  the  broker  by  reason  of  the  refusal  to  purchase. 
The  broker  would  not  be  entitled  to  commissions  from  the  seller  until 
he  has  brought  about  an  executed  contract,  and  therefore  would 
not  have  been  entitled  to  commissions  from  the  seller  until  the 
broker  had  done  so,  and  consequently  could  have  suffered  no  loss. 
Yet  even  in  such  case,  the  question  is  open  to  debate,  for  the 
seller  may  be  perfectly  willing  to  enter  into  the  contract  after  all 
the  terms  have  been  agreed  upon,  and  the  purchaser's  refusal 
would  be  the  reason  for  the  loss  of  the  commissions. 

In  those  states  wherein  the  doctrine  prevails  that  broker's  com- 
missions are  earned  when  the  broker  produces  a  purchaser  ready, 
willing,  and  able  to  purchase  on  his  principal's  terms,  the  broker 
cculd  have  no  right  of  action  against  the  purchaser  if  he  refused 
to  perform  after  having  made  a  written  contract  of  purchase.  In 
such  case,  the  seller  would  be  obligated  to  pay  the  commissions  and 
enforce  the  contract  of  sale  against  the  purchaser  or  not,  as  he 
chose.  Where,  however,  all  the  terms  of  sale  have  been  agreed 
upon,  and  the  purchaser  has  accepted  the  terms,  and  then  changes 
his  mind  and  refuses  to  carry  out  his  acceptance,  the  seller  being 

"See  §  117. 


WHO   IS   LIABLE   FOR   COMMISSIONS  79 

ready  and  willing,  the  broker  would  not  be  entitled  to  commissions 
from  the  seller  because  the  broker  had  not  produced  a  purchaser 
ready,  willing,  and  able,  yet  for  the  change  of  mind  or  refusal  on 
the  intending  purchaser's  part,  he  would  have  produced  such.  In 
the  latter  case,  the  broker  ought  to  be  entitled  to  recover  the  lost 
commissions  from  the  intending  purchaser.43  In  all  such  cases,  how- 
ever, strict  and  convincing  proof  should  be  required  so  that  no 
injustice  be  done  to  one  who  merely  negotiated  to  purchase  and 
then  abandoned  the  negotiations  without  actually  having  come  to 
final  and  settled  terms. 

§  21  Ob.     Misrepresentation  by  Purchaser  to  Seller  as  to 
Who  is  Broker  (p.  221) 

False  representations  on  the  part  of  the  purchaser  of  real  estate 
by  which  the  seller  is  induced  to  pay  the  broker's  commissions  to 
one  who  is  not  the  procuring  cause  of  the  sale,  give  no  right  of 
action  against  the  purchaser,  for  such  commissions,  to  the  broker 
who  really  procured  the  sale.  Neither  could  the  broker  recover 
the  commissions  from  the  other  broker  who  received  them  from 
the  seller.  The  real  broker's  remedy  is  still  against  his  principal, 
the  seller,  and  if  the  seller  has  been  induced  by  fraud  to  pay  the 
commissions  to  one  broker,  while  another  was  the  real  procuring 
cause  of  the  sale,  the  seller  alone  may  proceed  against  the  purchaser 
for  such  fraud.44 


96;  9  N.  Y.  Siippl.  512;  30  N.  Y.  St.  Rep.  436  (1890). 


CHAPTER  XXII 
AMOUNT  OF  COMPENSATION 

§  214.      Measure  of  Compensation    (p.  223) 

As  to  recovery  by  broker  on  failure  of  parties  to  carry  out 
exchange  contract,  of  the  following  items:  (1)  commission  on 
exchange  from  both  parties;  (2)  commission  on  loan  procured  for 
one  of  the  parties;  (3)  amount  broker  obligated  himself  for  in  pro- 
curing examination  of  title,  see  Hevia  v.  Wheelock.1 

§  214a.     Promise  to  Pay  Increased  Commissions  (p.  224) 

Where  a  broker  employed  to  find  a  purchaser  for  lands  agreed 
to  accept  $1,000  for  his  services  in  procuring  a  certain  purchaser 
at  a  time  when  all  the  negotiations  between  the  parties  had  been 
completed,  the  'sale  consummated,  and  the  officers  of  the  purchaser, 
a  corporation,  had  authorized  the  execution  of  a  contract  of  sale  and 
a  check  for  the  payment  of  thel  earnest  money  to  the  vendor  was 
ready  for  delivery,  so  that  all  that  was  necessary  to  complete  the 
contract  was  for  the  vendor  to  sign  the  agreement  and  receive  the 
check,  there  was  no  consideration  for  a  subsequent  promise  to  pay 
the  broker  an  increased  price  for  his  services,  no  additional  services 
having  been  rendered.2 

§   216.      Agreements   for  All   in   Excess   of    Fixed   Price 

(P-  225) 

In  third  paragraph,  after  sentence,  "The  same  ruling  has  been 
applied  in  other  jurisdictions,"  add  footnote  Sa: 

Louva  v.  Worden,  30  N.  D.  401;  152  N.  W.  689  (1915). 

§  217.      Rule  as  to  All  in  Excess  of  Fixed  Price  (p.  226) 

Where  a  broker  is  to  receive  one-half  of  all  in  excess  of  a 
fixed  amount  he  obtains  as  the  purchase  price,  it  was  held  that 
he  cannot,  in  the  absence  of  allegations  showing  he  has  no  adequate 
remedy  at  law,  sue  in  equity  for  an  accounting  against  his  prin- 
cipal even  though  the  broker  does  not  know  how  much  was  received 


M62  App.  Div.  759;  148  N.  Y.  Suppl.  165   (1914). 

'Mayer  v.  Penfield,  150  App.  Div.  66;  134  N.  Y.  Suppl.  762  (1912). 

80 


AMOUNT    OF    COMPENSATION  81 

by  his  principal  in  excess  of  the  fixed  amount.  His  remedy  is  said 
to  be  an  action  at  law  for  the  agreed  value  of  the  services  rendered, 
and  if  he  does  not  know  the  exact  amount  to  sue  for,  he  may 
commence  his  action,  and  then  examine  the  defendant  to  enable  the 
broker  to  frame  his  complaint  or  to  reveal  facts  showing  whether 
the  broker  has  an  adequate  remedy  at  law  or  requires  the  aid  of  a 
court  of  equity.3 

Yet  the  same  courts  have  repeatedly  denied  the  right  of  a  plain- 
tiff to  examine  a  defendant  in  order  to  obtain  facts  to  frame  a 
complaint,  and  have  held  that  such  an  examination  will  only  be 
granted  under  most  unusual  circumstances. 

A  grantee  of  real  property  is  liable  on  a  check  given  in  part  pay- 
ment and  transferred  by  the  grantor  to  his  agent,  although  the  latter 
when  negotiating  the  sale  told  the  vendee  that  the  owner  would  not 
sell  for  less  than  a  certain  price,  when  as  a  matter  of  fact  the 
vendor  had  told  the  agent  that  he  should  receive  for  his  services 
any  sum  he  succeeded  in  obtaining  above  a  stated  sum,  which  was 
less  than  the  consideration  paid,  and  the  check  transferred  to  the 
agent  represented  the  excess.  As  the  agent  was  not  acting  for  the 
grantee  and  owed  no  duty  to  him,  the  misstatement  of  fact  does  not 
prevent  a  recovery  so  long  as  there  was  no  misrepresentation  as  to 
the  value  of  the  property.4 

§  224.     Proof  of  Custom  (p.  233) 

Where  a  broker  sues  for  commissions,  he  may  himself  testify  as 
an  expert  to  the  customary  rate  of  commissions,  if  it  appears  that 
he  has  had  such  experience  which  would  make  him  familiar  with 
the  customary  rate.5 

Add  to  footnote  49  (p.  23k)  before  zvords,  "A  custom  contraven- 
ing": 

Higgins  v.    Moore,  34  N.   Y.   417,  422    (1866). 

§  226.      Compensation  in  the  Absence  of  Agreement  or 

Usage   (p.  236) 

In  a  real  estate  broker's  action  for  commissions  for  furnishing 
a  tenant  for  property,  evidence  of  real  estate  agents  as  to  the  value 
of  plaintiff's  services  was  admissible,  though  the  witnesses  had  ii" 
experience  in  the  real  estate  business  in  the  city  where  the  services 

-'Stewart    v.    Aucrl.ach.    14S    A,,,-.    Wv.    222j    ||2    ^  ^'    ^l  ^L^' 

iOS^V  wSSfth  BLfwS  if**  £  >< '»?» •" N  ""!"': 


82  COMMISSIONS  AND  THEIR  RECOVERY 

were  rendered,  there  being  no  evidence  that  the  value  of  such  services 
was  different  in  such  city  from  that  in  other  places,  or  that  there 
was  any  custom  or  fixed  rates  there  prevailing  different  from  other 
places.6 


•Floore  v.  Burgher,  (Tex.  Civ.  App.)  128  S.  W.  1152  (1910). 


CHAPTER  XXIII 
WHEN  COMMISSIONS  ARE  DUE 

§  228.  Rule  as  to  When  Commissions  Are  Due  (p.  238) 
"When  a  broker,  as  a  part  of  his  employment,  assumes  to  execute 
for  his  principal  an  executory  contract  of  sale  or  exchange,  he  does 
not  become  entitled  to  his  commission  unless  the  other  contracting 
party  is  able  to  perform  the  contract  on  his  part."7 

^ 

§  230.     Unsupported  Agreements  to  Wait  for  Commis- 
sion (p.  241) 

"A  broker  is  entitled  to  his  commissions  when  he  has  produced 
a  purchaser  ready  and  willing  to  enter  into  a  contract  on  the 
employer's  terms ;  and  where  the  broker  has  produced  a  purchaser 
ready  and  willing  to  contract  on  the  terms  stipulated,  a  subsequent 
agreement,  without  consideration,  not  to  claim  his  commissions  until 
the  happening  of  some  other  contingency,  is  not  binding  on  him, 
and  a  recital  in  such  agreement  that  it  is  in  consideration  of  the 
execution  of  the  contract  of  sale  does  not  establish  a  valid  considera- 
tion, as  the  procuring  of  the  contract  of  sale  was  the  consideration 
for  the  broker's  commissions."  8 

Where  a  broker  signs  a  written  agreement  to  waive  his  com- 
missions if  the  contract  of  sale  is  not  performed,  and  the  broker 
then  sues  for  his  commissions,  although  the  contract  of  sale  was 
not  performed,  he  claiming  that  the  written  agreement  to  waive 
commissions  was  obtained  by  fraud  and  false  representations  and 
that  therefore  his  original  oral  agreement  of  employment  was  revived, 
the  City  Court  of  New  York,  being  an  inferior  local  court  and  with- 
out general  equity  jurisdiction,  cannot  grant  any  relief  by  way  of 
setting  aside  or  rescinding  the  written  brokerage  contract  because  of 
fraud  or  false  representations.9 

A  suggestion  worthy  of  quotation  is  made  in  one  case  wherein 
it  is  said  that,  "there  is  quite  a  distinction  between  contracts  of 
brokers  containing  the  condition  that  commissions  are  only  to  be 


'Inge  v.  McCreery,  60  Anp.  Div.  557;  69  N.  Y.  Suppl.  1052  (1901). 

"Taubenblatt  v.  Galewskl  108  N.  Y.  Supnl.  588  (SW  Ct  App.  Term.  l^B)  citing 
McComb  v.  Von  Ellert.  7  Misc.  59;  27  N.  V  Suppl  372;  Moskowiti :  v  Hornbrrger 
15  Misc.  645;  38  N.  Y.  Suppl.  114;  Hough  v.  Baldwin,  SO  Mi*c-  >*:  99  N  \ .  Suppl.  545. 

"Wiederrnan  v.  Verschleiser.  93  Misc.  453;  158  N.   Y.  Suppl.  308   (1916). 

83 


84  COMMISSIONS    AND    THEIE   RECOVERY 

paid,  viz.,  'when  deed  is  actually  delivered'  or  'title  closed,'  or  'when 
title  is  passed,'  or  'on  closing  of  title/  or  'commissions  not  to  be 
due  or  payable  until  title  is  passed.'  There  can  be  found  expression 
of  opinions  in  the  books  covering  all  such  conditions  wherein  a 
broker  can  or  cannot  recover  unless  an  enforcible  contract  is  fully 
carried  out,  and  also  holding  to  the  effect  that  the  payment  of  the 
commissions  is  suspended  until  the  certain  event  has  happened.  But 
each  case  must  be  decided  upon  its  own  facts."  10 

Add  to  footnote  16: 

Bernstein  v.  Fulson  Realty  Co.,  152  N.  Y.  Suppl.  9)5   (1915). 

§  231.     Valid  Agreements  Deferring  Payment  of  Com- 
missions (p.  243) 

Where  the  only  evidence  of  an  employment  or  of  an  agreement 
to  pay  commissions  is  furnished  by  the  clause  in  the  contract  that 
the  seller  agrees  that  a  certain  person  is  the  broker  who  brought 
about  the  sale,  and  agrees  to  pay  his  commissions,  and  that  he 
"shall  be  entitled  to  his  commission  upon  passing  of  title  as  agreed," 
the  broker  cannot  recover  unless  he  proves  that  title  passed.11 

This  decision  apparently  has  its  basis  in  the  fact  that  the  broker 
having  shown  no  prior  employment,  the  contract  clause  must  be 
assumed  to  be  the  evidence  of  his  employment,  and  that  the  agree- 
ment to  wait  for  commissions  is  valid  because  being  part  of  the 
contract  of  employment. 

In  Williams  v.  Ashner,12  the  brokers  had  begun  negotiations  to 
bring  about  a  lease,  but  before  they  had  really  produced  anyone 
ready,  willing,  and  able  to  enter  into  a  lease,  the  landlord  insisted 
that  the  brokers  sign  an  agreement  that  no  commissions  would  be 
paid  unless  a  lease  between  certain  named  persons  was  actually 
executed,  and  the  court  held  the  agreement  valid,  and  denied  com- 
missions on  failure  of  the  broker  to  show  that  such  a  lease  had 
actually  been  signed. 

In  Colvin  v.  Post  Mortgage  &  Land  Co.,13  the  opinion  states  that 
while  the  broker's  negotiations  for  a  sale  were  pending,  "it  was 
orally  agreed  by  defendant  (the  principal)  that  if  plaintiff  (the 
broker)  would  find  a  buyer  and  defendant  should  sell  the  land  for 
$150,000  plaintiff  should  be  paid  a  commission  of  ten  per  cent. 

"On     April     18,     1913,     the     agreement     between     plaintiff     and 


10Meckes  v.  Mullen.  75  Misc.  303.  304;  132  N.  Y.  Suppl.  942  (1912). 
"Reis  Co.  v.  Zimmerli,  170  App.  Div.  502;  155  N.  Y.  Suppl.  327  (1915). 
"152  App.  Div.  447;   137  N.  Y.   Suppl.  275   (1912). 
"173  App.  Div.  85;  159  N.  Y.  Suppl.  361   (1916). 


WHEN    COMMISSIONS    AKK    IMK  85 

defendant  was  reduced  to  writing  and  signed  by  both.  This  agree- 
ment reciu-d  plaintiffs  negotiation  of  a  sale  of  the  property  for 
•tl.  ".0,000,  and  provided"  for  the  payment  of  commissions  on  instal- 
ments of  the  purchase  price  as  received  by  defendant.  The  court 
said: 

"The  plaintiff  has  evolved  an  ingenious  theory  by  which  he  seeks 
to  avoid  the  application  of  the  rule  that  where  parties  have 
deliberately  entered  upon  a  written  agreement,  all  prior  negotiations 
and  agreement  upon  the  subject-matter  thereof  will  be  deemed  to 
be  merged  therein.  His  argument  is  that  by  reason  of  his  employ- 
ment to  find  a  purchaser  and  his  success  in  so  doing  an  obligation 
arose  on  the  part  of  the  defendant  to  pay  his  commissions,  and  that 
the  subsequent  written  agreement  specifying  how  and  when  the  com- 
missions should  be  paid  was  without  consideration  and  void.  If 
this  contention  should  be  permitted  to  prevail,  there  would  be  an 
end  of  the  salutary  rule  now  so  strongly  entrenched  in  our  law. 
That  rule  is  based  upon  the  soundest  principles  of  public  policy 
and  is  not  to  be  overturned  at  this  late  day.  There  is  a  conclusive 
presumption  in  such  a  case  that  the  written  document  expresses 
the  consummated  agreement  between  the  parties,  and  neither  will 
be  heard  to  assert  that  it  differs  from  a  prior  oral  agreement  covering 
the  same  subject." 

§  232.     Contingent  Commission  Agreements   (p.  243) 

Where  a  contract  for  the  sale  of  real  estate  provided  for  the 
payment  of  a  broker's  commission  to  the  broker  when  the  title 
closed  and  not  otherwise  unless  the  failure  to  close  title  was  caused 
by  fault  of  the  vendor,  and  the  seller  returns  the  deposit  becausr 
the  vendee's  assignee  is  irresponsible  and  unwilling  to  complete,  tht 
broker  is  not  entitled  to  commission.14 


Add  to  footnote  31  (p.  2 

Dean  v.  Williams.  56  Wash.  61-4;  106  Pac.  130  (1910). 

§  233.     Construction  of  Agreements  to  Wait  until  Title  Is 
Closed  (p.  245) 


Add  to  footnote  37  ( 

See  also  Mcckes  v.  Mullen,  75  Misc.  303;  132  N.  Y.  Suppl.  942  (1912). 

§  235.      Commissions  on  Instalment  Sales   (p.  248) 

Where  a  written  contract  employing  a  real  estate  broker  t<.  find 
a  purchaser  for  lands  expressly  provided  that  he  should  receive  as 

"Ivins  Co.  v.  Martin  Holding  Co..  84  Misc.  437;  146  N.  Y.  Suppl.  126  (1914). 


86  COMMISSIONS    AND    THEIR   RECOVERY 

commissions  a  certain  percentage  of  the  purchase  price  "payable  pro 
rata  from  each  instalment  of  the  purchase  price  as  and  when  the 
same  is  received"  by  the  seller,  the  final  instalment  of  the  com- 
mission being  made  payable  when  the  sale  was  finally  completed, 
and  also  expressly  provided  that  if  the  purchaser  should  terminate 
the  contract  the  rights  of  the  broker  "shall  be  thereby  terminated," 
he  cannot  recover  commissions  except  upon  actual  payments  made 
by  the  purchaser  to  the  seller.  Any  prior  oral  agreement  to  the 
effect  that  the  plaintiff  should  be  entitled  to  commissions  if  he  found 
a  purchaser,  is  merged  in  the  subsequent  written  agreement,  and 
the  theory  that  the  restrictions  placed  upon  the  rights  to  com- 
missions in  the  written  agreement  were  without  consideration  is 
untenable.15 

A  provision  in  an  agreement  with  a  broker  for  the  sale  of  lots 
on  the  instalment  plan  which  read  as  follows :  "Where  lots  are 
sold  on  the  instalment  plan  out  of  each  instalment  the  said  Van 
Varick  shall  receive  sixty  (60)  per  cent,  until  the  total  amount  of  his 
commissions  is  paid,"  was  construed  to  mean  that  the  commissions 
should  be  paid  only  out  of  instalments  actually  received  by  the 
principal.16 

Where  a  broker  is  working  for  a  land  company  on  instalment 
sales  under  an  arrangement  by  which  the  land  company  is  to  give 
the  broker  one  week's  notice  before  it  may  cancel  any  contracts 
because  of  default  in  the  payments  of  the  instalments  of  the  pur- 
chase price,  the  broker  is  entitled  to  at  least  nominal  damages 
against  the  land  company  for  cancellation  of  any  contracts  without 
notice  to  him,  and  if  the  broker  can  show  the  financial  ability  of 
the  purchasers  to  continue  payment  of  the  instalments,  he  may  pos- 
sibly be  entitled  to  substantial  damages  for  the  cancellation 
without  notice  to  him,  inasmuch  as  the  notice  to  the  broker  was 
intended  to  give  him  an  opportunity  to  persuade  the  purchasers  to 
continue  their  payments.17 

15Colvin  v.  Post  Mortgage  &  Land  Co.,  173  App.  Div.  85,  86;  159  N.  Y.  Suppl. 
361  (1916). 

"Van  Varick  v.  Suburban  Investment  Co.,  76  Misc.  593;  135  N.  Y.  Suppl.  299  (1912). 

"Benequit  v.  N.  Y.  &  N.  J.  Real  Estate  Imp.  Co.,  148  App.  Div.  628;  133  N.  V. 
Suppl.  226  (1912). 


CHAPTER  XXIIIa 


§  235a.     General  Statement 

Although  Sunday  sales  are  of  frequent  occurrence,  only  one  case 
has  been  found  reported  in  which  the  broker's  right  to  commis- 
sions has  been  disputed,  although  unsuccessfully,  on  the  ground  that 
the  sale  was  made  on  Sunday.1  Cases  involving  criminal  prosecution 
for  selling  goods  or  merchandise  on  Sunday  are  numerous,  and  an 
occasional  prosecution  for  selling  land  on  Sunday  may  also  be 
found.2 

The  justification  and  non-justification  of  Sunday  sales  will  not 
be  discussed.  It  is  only  the  legal  aspect,  and  not  the  moral  aspect, 
which  is  to  be  presented. 

Sunday  ordinarily  commences  at  twelve  o'clock  on  the  night 
between  Saturday  and  Sunday  and  ends  twenty-four  hours  there- 
after. In  Connecticut,  it  legally  begins  at  sunsetting  on  Saturday 
and  ends  at  the  same  time  on  the  next  day.3 

Sunday  Contracts   Not  Prohibited  by  Common 

The  common  law  did  not  prohibit  business  on  Sunday.4  And  so, 
the  common  law  never  prohibited  the  making  of  contracts  on  Sunday.5 
Yet  it  is  said  that  Sunday  is  among  the  most  ancient  institutions 
of  the  Christian  religion,  and  the  Christian  system  of  religion  is 
recognized  as  constituting  part  of  the  common  law.6 

"At  the  common  law,  the  fact  that  a  contract  was  executed  on 
Sunday  did  not  vitiate  or  affect  it;  but  in  many  of  the  American 
states  statutes,  have  been  adopted  which  have  been  construed  by 
their  courts  as  having  the  effect  of  annulling  any  contract  executed 
and  delivered  on  Sunday,  on  the  ground  that  such  statutes  prohibit 
the  making  of  contracts  on  that  day,  and  that  all  contracts  made  on 


'See  S  235d. 

=See  §  235d. 

'Finn  v.  Donahue.  35  Conn.  216. 

«37  Cyc.  545. 

•Sbuman  v.  Shuman.  27  Penn.  St.  90  (1856). 

•Shaver  v.  State.  10  Ark.  259. 

87 


88  COMMISSION'S    AND    THEIR    RECOVERY 

said  day  were  in  violation  of  such  statutes,  and  were  therefore 
null  and  void.  All  the  authorities  agree  that  whether  or  not  a 
contract  is  affected  by  the  fact  of  having  been  executed  on  Sunday 
depends  upon  the  terms  and  provisions  of  .the  state  statute  on  the 
subject."  7 

Most  of  the  statutes  specifically  allow  the  sale  of  articles  such 
as  milk,  tobacco,  confections,  etc.,  and  many  give  express  sanction 
to  the  running  of  railroads,  ferries,  operation  of  power  plants,  etc., 
and  to  the  printing  and  publication  of  newspapers  on  Sunday. 

The  general  rule  is  that  a  contract  which  is  completed  on  a  secular 
day  is  not  void  because  negotiations  therefor  have  been  conducted 
on  Sunday.8 

The  authorities,  for  the  most  part,  hold  that  the  mere  fact  that 
the  terms  of  a  sale  were  agreed  upon  on  Sunday  will  not  invalidate 
a  contract,  where  the  delivery  and  payment  took  place  on  a  secular 
day,  it  being  generally  held  that  delivery  and  payment  in  themselves 
were  sufficient  to  constitute  a  complete  contract  regardless  of  what 
may  have  taken  place  on  Sunday.9 

§  235c.     Liberal  or  Strict  Construction  of  Sunday  Laws 

In  some  states  the  Sunday  laws,  being  enacted  as  penal  statutes, 
are  strictly  construed.10 

In  New  York,  the  Sunday  laws  are  incorporated  principally  in 
the  Penal  Law.11  It  is  provided  by  the  Xew  York  Penal  Law  itself 
that,  "the  rule  that  a  penal  statute  is  to  be  strictly  construed  does 
not  apply  to"  the  Penal  Law,  "or  any  of  the  provisions  thereof,  but 
all  such  provisions  must  be  construed  according  to  the  fair-  import 
of  their  terms,  to  promote  justice  and  effect  the  objects  of  the  law."1- 
When  one  speaks  of  construing  a  penal  statute  strictly,  it  is  not 
intended  thereby  to  suggest  a  strict  enforcement  of  the  law  but  rather 
a  strict  construction  of  the  law  in  favor  of  the  accused. 

''While  questions  have  been  raised  as  to  noiseless  and  inoffensive 
occupations  that  can  be  carried  on  by  one  individual  without  requir- 
ing the  services  of  others,  as  well  as  to  persons  who  observe  the 
seventh  instead  of  the  first  day  of  the  week,  still  the  rule  is  believed 
to  be  general  throughout  the  Union,  although  not  generally  enforced, 
that  the  ordinary  business  of  life  shall  be  suspended  on  Sunday 


•Hooks  v.  State.  58  Fla.  57;  50  So.  586  (1909). 

8See  note  in  20  A.  &  E.  Ann.  Cases  36,  to  Burr  v.  Xivison,  75  N.  J.  Eq.  241;  72 
All.  72  (1909). 

•See  note  in  20  L.  R.  A.  (N.  S.)  86,  to  King  v.  Graef,  136  Wise.  548;  117  X.  W. 
1058  (1908). 

"Hooks  v.  State.  58  Fla.  57;  50  So.  586  (1909),  construing  §  3365,  Fla.  Gen.  St.  1906. 


"I  2140  et  seq. 

"§  21,  N.  Y.  Penal  Law. 


SUNDAY    S.M.KS  89 

in  order  that  thereby  the  physical  and  moral  well-being  of  Un- 
people may  be  advanced.  The  inconvenience  to  some  is  not  regarded 
a,  an  argument  against  the  constitutionality  of  the  statute,  as  that 
is  an  incident  to  all  general  laws.  Sunday  statutes  have  been  sus- 
tained as  constitutional  almost  without  exception  .....  While 
works  of  charity  and  necessity  have  usually  been  excepted  from 
the  effect  of  laws  relating  to  the  Sabbath,  and  sometimes,  also,  those 
persons  who  keep  another  day  of  the  week,  still  quiet  pursuits  have 
not,  even  when  they  can  be  carried  on  without  the  labor  of  others. 
because  general  respect  and  observance  of  the  day,  so  far  as 
practicable,  have  been  deemed  essential  to  the  interest  of  the  public, 
including  as  a  part  thereof  those  who  prefer  not  to  keep  the  day, 
as  their  health  and  morals  are  entitled  to  protection,  even  against 
their  will,  the  same  as  those  of  any  other  class  in  the  community. 
According  to  the  common  judgment  of  civilized  men,  public  economy 
requires,  for  sanitary  reasons,  a  day  of  general  rest  from  labor,  and 
the  day  naturally  selected  is  that  regarded  as  sacred  by  the  greatest 
number  of  citizens,  as  this  causes  the  least  inconvenience  through 
interference  with  business."13 

§  235d.      Commissions  on  Sunday  Sales 

It  has  been  held  that  where  there  is  an  entire  contract  to  do  cer- 
tain work,  the  most  of  which  is  to  be  done  on  Sunday,  the  contract 
is  void.14 

But  it  has  also  been  held  that  where  an  exchange  was  brought 
about  by  a  broker,  and  the  exchange  contract  was  executed  on  a 
Sunday,  that  fact  would  not  deprive  the  broker  of  his  commissions, 
particularly  so  if  all  the  arrangements  had  been  agreed  upon  the  day 
before.15 

In  the  case  referred  to.  the  court  said:  "This  agreement  took 
place  on  Saturday  evening,  April  twenty-second.  The  fact  that  the 
contract  which  the  parties  had  entered  into  was  not  formally  signed 
and  delivered  until  the  day  following  was  a  circumstance  wholly 
immaterial,  and,  in  no  way,  affected  the  right  of  the  plaintiff  to 
recover  under  his  pleading.  At  common  law,  the  making  of  a  con- 
tract on  Sunday  is  not  void.16  Section  2143  of  the  Penal  Law,  which 


.      . 

Theatre  Co.  v.  Evans.  4  Ohio  Dec.  151. 


(N.   Y.)   235. 


90  COMMISSIONS    AXI>    THEIR    RECOVERY 

prohibits  the  performance  of  'labor'  on  Sunday,  and  section  2146  of 
that  law,  which  prohibits  trades,  manufactures,  agricultural  or  me- 
chanical employments  on  Sunday,  do  not  condemn  or  render  void 
a  contract  signed  on  that  day.  The  Sunday  laws  are  to  be  liberally 
construed,  and  acts  done  on  that  day,  which  do  not  disturb  or  inter- 
fere with  others,  and  are  not  contrary  to  the  design  sought  to  be 
accomplished  by  such  laws,  are  not  illegal.17  Thus,  a  deed  delivered 
on  that  day  is  sufficient  to  pass  title.18  And  our  Court  of  Appeals 
has  held  that  a  contract  for  the  sale  of  property  made  on  Sunday  is 
not,  for  that  reason,  void.19  Other  cases  asserting  the  same  principle 
are  collated  in  a  note  to  Batsford  v.  Every  (supra). 

"We  think  that  the  evidence  shows  that  the  plaintiff  completed  his 
services  on  Saturday,  and  that  his  right  to  his  commissions  accrued 
at  that  time.  Even  if  it  could  be  held  that,  in  view  of  the  allegation 
of  his  pleading,  the  right  to  his  commissions  did  not  accrue  until 
the  contract  was  signed,  the  fact  that  the  parties  to  the  exchange 
executed  that  contract  on  Sunday  did  not  operate  to  deprive  the 
plaintiff  of  the  fruits  of  his  labor."20 

The  Xew  York  Court  of  Appeals  in  People  v.  Dunford-1  held 
that  nothing  in  the  reading  of  section  of  the  Xew  York  Penal 

Law  would  suggest  to  the  ordinary  mind  that  the  "public  traffic"  to 
be  prohibited  related  to  an  effort  to  sell  real  estate  such  as  the  de- 
fendant in  that  case  was  proved  to  have  made.  In  that  case  the 
complainant,  a  detective  sergeant,  met  the  defendant  upon  a  railroad 
train  on  Sunday,  and  the  defendant  accosted  him  and  showed  him 
a  map  of  lots  and  the  complainant  asked  the  price  of  a  lot  and,  upon 
being  informed,  stated  that  he  did  not  think  he  would  buy :  that  he 
would  think  the  matter  over  and  call  during  the  week.  The  train 
carried  a  number  of  persons  to  a  point  where  land  had  been  mapped 
out  into  lots  for  selling  purposes  but  the  only  act  which  was  shown 
on  the  defendant's  part  in  the  way  of  a  business  transaction  was 
his  offering  of  lots  of  land  for  sale  to  the  complainant.  The  court 
held  that  this  was  not  a  violation  of  the  section  of  the  Sunday  law 
referred  to,  but  added:  "We  may  assume  that  the  defendant  was 
interested  in  inviting  public  attention  to  a  proposed  sale  of  lands. 
If  it  had  been  shown  that  a  concourse  of  persons  had  been  attracted, 
with  accompaniments  of  a  noisy  character,  or,  even,  that  there  had 
been  an  offering  of  the  lands  at  public  auction,  perhaps,  a  case  of 

"Citing  Xorthrup  v.   Foot,   14  Wend.    (X.   Y.)   2-48;   Smith  v.   Wilcox,  24   X     ^ 
Cf.  5  235c. 

"Citing  Shuman   v.   Shuman,  27   Penn.   St.  90. 
"Citing  Eberle  v.  Mehrbach,  55  X.  Y.  682. 
^McConnick  v.  Hazard,  sufra. 
"207  X.  Y.  17;  100  NT.  E.  433;  1  L.  C.  A.  141   (1912). 


!ll 

Sabbath  breaking  might  have  been  made  out  under  section  21  \'>. 
which  prohibits  'all  noise  disturbing  the  peace  of  the  day.'  No  such 
charge,  however,  was  made." 

§  235e.     Sunday  Laws  of  Various  States 

In  Xew  Jersey  the  statute  provides,  "That  no  travelling,  worldly 
employment  or  business,  ordinary  or  servile  labor  or  work  either 
upon  land  or  water  (works  of  necessity  and  charity  excepted), 
.  .  .  .  shall  be  done  ....  on  the  Christian  Sabbath,  or  first 
day  of  the  week,  commonly  called  Sunday. "-- 

So  in  Xew  Jersey  a  parol  agreement  to  sell  land  made  on  Sunday 
was  held  void  because  the  bargain  was  made  on  Sunday,  and  that  no 
subsequent  recognition  of  it,  short  of  a  new  bargain,  could  give  it 
validity.23 

An  Illinois  case,24  construing  §261  of  the  Illinois  Criminal  Code, 
holds  that  the  act  of  labor  on  Sunday  is  not  an  offense  if  done  in  a 
way  not  to  disturb  the  peace  and  good  order  of  society.25 

Worldly  employment  or  business  on  Sunday  is  made  a  punishable 
offense  in  Pennsylvania.26 

The  Pennsylvania  Sunday  law27  merely  denounces  a  penalty  for 
violation  of  its  provisions,  and  does  not  expressly  annul  or  avoid 
the  act  done.28 

The  effect  of  such  provisions  on  executory  contracts,  as  distin- 
guished from  executed  contracts,  is  discussed  in  the  following  section. 

In  Massachusetts,  all  manner  of  labor,  business  or  work,  except 
works  of  necessity  or  charity,  is  prohibited,  under  fine.29 

The  Wisconsin  statute30  inflicts  a  fine  on  any  person  who  does 
any  manner  of  labor,  business,  or  work,  except  only  works  of  neces- 
sity and  charity,  on  Sunday. 

The  Florida  statute  provides,  "Whoever  follows  any  pursuit,  busi- 
ness or  trade  on  Sunday,  either  by  manual  labor  or  with  animal  or 
mechanical  power,  except  the  same  be  work  of  necessity,  shall  be 
punished  by  a  fine  not  exceeding  $50. "31 


--X.  J.  R.  S.  ?:;?,  608,  Vol.  3,  Gen.  St.  N.  J.  p.  3707. 

•Ryno  v.  Darby,  20  N.  J.  Eq.  231  (1869). 

"Foil  v.  People,  66  111.  App.  411    (18%). 

*This  case   digests:   Johnston   v.   People    31    111.   473;   Scammcn   v.   (  ity   o 
40  111    146;  Richmond  v.  Moore,  107  111.  433;  McPherson  v.  Village  of  Chebanse,  11 
49;    Eden   v.   People,   161    111.  296. 

W3  Sm.   L.  177,  §  1;  Pepper  &  Lewis'  Dig.  Vol.  2,  p.  4406. 
'    ^Stat.   of  Apl.  22,  1794. 

»Shuman   v.    Shuman,   27   Penn.   St.  90    (18S6). 

^Mass.   R.   L.   Ch.  98.   §2,  as  amended  hy  Act  of  June  9,  1904. 

s"\Visc.   St.  1898, 

"'§3565,  Fla.  Gen.   St.  1906.     See  J235g  as  to  construction  of  this  statute. 


92  COMMISSIONS    AND    THEIR    RECOVERY 

§    235f.      Effect   of   Sunday   Laws   on   Executory   and   on 
Executed  Contracts 

In  Shuman  v.  Shuman,32  it  was  said  that  the  construction  usually 
given  to  the  act  of  1794,  is  that  contracts  made  on  Sunday  are  void, 
agreeably  to  the  principle  that  every  contract  made  for  or  about  any 
matter  or  thing  which  is  prohibited  or  made  unlawful  by  statute  is 
a  void  contract,  though  the  statute  does  not  mention  that  it  shall  be 
so  but  only  inflicts  a  penalty  on  the  offender,  because  a  penalty 
implies  a  prohibition  though  there  are  no  prohibitory  words  in  the 
statute.  "This  rule  was  predicated  of  an  executory  contract.  .  .  . 
The  law  will  not  lend  its  aid  to  enforce  a  contract  made  in 
violation  of  the  provisions  of  a  statute;  but  the  question  now  pre- 
sented is  whether  the  law  will  undo  such  a  contract  when  the  parties 

themselves    have    fully    executed    it If    two    men    agree    on 

Sunday  to  exchange  horses,  their  contract,  so  far  as  respects  any 
legal  remedies,  is  void;  but  if  they  make  the  exchange  in  pursuance 
of  their  agreement,  will  the  law  compel  them  to  trade  back?  The 
answer  to  these  questions  is  obvious.  A  contract  not  void  at  common 
law,  nor  expressly  avoided  by  any  statute,  and  which  has  been  fully 
executed  by  the  parties,  binds  them  although  it  was  made  on  Sunday." 

§  235g.     Sunday  Statutes  Which  Do  Not  Affect  Sunday 
Contracts 

Under  the  Florida  statute,33  it  was  said  that,  "The  execution  of 
a  note,  mortgage,  or  other  contract  requires  neither  manual  labor 
nor  any  animal  or  merchanical  power,  and  we  do  not  think  that  their 
execution  on  Sunday  is  prohibited  by  this  statute,  and  that,  conse- 
quently, the  validity  of  any  contract  made  in  this  state  is  not  affected 
by  the  fact  that  it  was  executed  or  delivered  on  Sunday.  The 
purpose  of  our  statute,  when  all  of  its  provisions  are  considered, 
seems  to  be  to  prohibit  the  performance  on  Sunday  only  of  those 
works  or  pursuits  that  from  their  nature  have  to  be  performed  in 
public,  and  that  may,  therefore,  be  offensive  to  the  sensibilities  of 
the  Christian  community  in  which  they  are  carried  on,  if  followed 
on  the  Lord's  Day."34 


82  27  Penn.  St.  90  (1856). 

""pses,  Fla.  Gen.  St.  1906. 

*4Hooks  v.  State,  58  Fla.  57;  50  So.  586  (1909);  citing  1  Page  on  Contracts,  §§  455, 
456;  Bloom  v.  Richards,  2  Ohio  St.  387;  Johnson  v.  Brown,  13  Kan.  529;  Horacek 
v.  Keebler,  5  Neb.  355;  Ray  v.  Catlett,  12  B.  Mon.  (Ky.)  532;  Boynton  v.  Page,  13 
Wend.  (N.  Y.)  425;  Moore  v.  Murdock,  26  Cal.  515;  Roberts  v.  Barnes,  127  Mo. 
405;  30  S.  W.  113;  48  Am.  St.  Rep.  640;  Hellams  v.  Abercrombie,  15  S.  C.  110;  40  Am. 
Rep.  684;  Fitzgerald  v.  Andrews,  15  Neb.  52;  17  N.  W.  370. 


Part  III— Principal  and  Agent 


CHAPTER  XXIV 
PRINCIPAL'S  RELATIONS  TO  AGENT 


4 


237.     Principal  May  Employ  Several  Brokers  (p.  250) 

"Where  the  principal  employs  several  agents  as  brokers,  the  sale 
of  the  land  by  one  of  the  agents  or  the  principal  terminates  the 
authority  of  them  all,  although  notice  of  the  sale  may  not  have  been 
given,  and  the  principal  will  only  be  liable  for  a  commission  to  the 
agent  who  was  the  procuring  cause  of  the  sale.  If  the  brokers  have 
no  knowledge  of  the  employment  of  others,  the  broker  who  was  the 
procuring  cause  of  the  sale  is  entitled  to  his  commissions,  no  matter 
if  another  broker  or  the  principal  takes  up  the  matter  and  completes 
the  sale.1  A  number  of  agents  may  have  rendered  service,  such  as 
finding  a  purchaser  who  otherwise  would  not  have  been  found,  and 
yet  may  fail  to  consummate  a  sale,  and  another  may  take  it  up  and 
complete  it,  and  the  last  one  would  be  entitled  to  the  commissions."* 

So  where  property  is  placed  in  the  hands  of  several  brokers  for 
the  purpose  of  securing  a  tenant,  the  owner  is  ordinarily  obligated 
to  pay  commissions  only  to  the  one  who  was  the  procuring  cause  of 
the  lease.3 

When  sued  by  one  broker,  the  principal  may  introduce  proof  to 
show  that  another  broker  brought  about  the  sale  or  lease,4  and 
where  the  owner  of  property  defends  a  broker's  action  on  the 
ground  that  the  broker  was  not  the  procuring  cause,  the  owner  may 
prove  that  he  paid  another  broker  the  commission.5 

Add  to  footnote  1  (p.  251) : 

Dalke  v  Sivyer.  105  Pac.  (Wash.)  1031  (1909);  Baldino  v.  Henneberry. 
191  111  App.  368  (1915);  Smith  v.  Fowler,  57  Tex.  Civ.  App.  356;  122 
S.  W.  598  (1909). 


'Citing  Clark   &   Sykes  on  Agency,   S 

'Smith  v.  Fowler',  57  Tex.  (  .  122  S.  \V.  598  (1909);  Whheomb  v. 

Bacon  17')  Mas*  47";  4"  X.  K.  M2j  M  Am.  St.  Rep.  317;  Reynolds  v.  Tompkins. 
J3  \V.'  Ya.  235;  Francis  v.  Eddy,  49  Minn.  447;  52  N.  \V.  43;  Plan  v.  Johr  9  Ind. 
Ann  5s-  V,  S  }•'.  294:  So. it  v  Floyd,  1"  Colo.  401;  35  Pac.  733;  \\  :ird  v.  Fletcher. 
P4  Mast  224;  C.lascock  v.  YannVet,  100  Tcnn.  603;  46  S.  W.  449. 

"Thorpe   v.    Cameron,   191    111.    Ann.   455    (1'M.i). 

•'Fredel   v.    BaldinKcr,   13*    X.   Y.    Suppl.    147    <1"12>. 

•'Owcharoffsky  v.  Trustees  of  \V.  C.  M.  <  hurch,  86  Misc.  36;  1«  N.  \  .  SoppL 
138  (1914). 

93 


94  PEINCIPAL    AND    AGENT 

§  239.     Exclusive  Agency   (p.  251) 

Add  to  footnote  10  (p.  252) : 

Snook  v.  Page  (Cal.  App.)  155  Pac.  107  (1915);  Hill  v.  Horsley,  82 
S.  E.  (Ga.)  225  (1914);  Stallworth  v.  Martin,  87  S.  E.  (Ga.)  1094  (1916); 
Wright  v.  Waite,  126  Minn.  115;  148  N.  W.  50  (1914). 

§  240.     Intervention  by  Principal  (p.  252) 
Add  to  footnote  13: 

Dalke  v.  Sivyer,  105  Pac.  (Wash.)   1031   (1909). 

§  242.     Rule  when  Broker's  Efforts  Fail  (p.  253) 

At  end  of  §  242  (p.  254),  add: 

But  the  owner  cannot  escape  payment  of  commissions  by  col- 
lusively  arranging  with  the  real  purchaser,  produced  by  the  broker, 
to  give  the  transaction  the  appearance  of  a  purchase  by  some  other 
person  than  the  real  purchaser.6 


"Fifer  v.  Lewis,  183  111.  App.  349    (1914). 


CHAPTER  XXV 
AGENT'S  RELATIONS  TO  PRINCIPAL 

§  249.     Agent's  Power  to  Make  and  Indorse  Negotiable 
Paper  (p.  258) 

At  end  of  §  21,9  (p.  259),  add: 

This  case1  was  subsequently  reversed  because  there  was  no  evi- 
dence that  the  accomplishment  of  any  act  authorized  by  the  power 
of  attorney  to  the  agent,  necessitated  the  indorsement  and  transfer 
of  a  check,  and  that  at  the  most,  whether  indorsement  and  transfer 
were  necessitated  by  the  acts  authorized,  was  a  question  of  fact. 
Where  the  power  of  attorney  does  not  give  express  authority  to 
indorse  checks,  the  agent  does  not  possess  it  unless  it  inheres  in  the 
authority  expressly  given  to  do  other  acts,  and  this  is  not  the  case 
unless  it  is  reasonably  necessary  to  effectuate  the  objects  of  the 
agency,  and  therefore  within  the  intent  of  the  principal,  and  it  must 
appear  clearly  that  the  accomplishment  of  the  acts  expressly  au- 
thorized required  the  exercise  of  the  authority  to  indorse.  "The 
express  authority  to  receive  negotiable  paper  does  not  imply  the 
power  to  indorse  it."2 


'Forges  v.  U.   S.  Mtge.  &  Trust  Co.  203  N.  Y.  181;  96  N.  E.  424  (1911). 

'•Citing  Holtsinger  v.  National  Corn  Exchange  Bank,  1  Sweeny  64;  affirmed  by 
the  Court  of  Appeals,  3  Alb.  L.  J.  305;  National  City  Bank  of  Brooklyn  v.  Wcstcott, 
118  N.  Y.  468;  Rossiter  v.  Rossiter,  8  Wend.  494;  Filley  v.  Oilman,  2  J.  &  S.  339; 
Jackson  Paper  Mfg.  Co.  v.  Commercial  Nat.  Bank,  199  111.  151. 


95 


CHAPTER  XXVI 
LIABILITY  OF  BROKER  AND  PRINCIPAL 

§  252.   Misrepresentations  by  Brokers  and  Agents  (p.  260) 

The  fact  that  in  making  false  representations,  the  promissor  is 
acting  for  others,  may  render  his  principals  liable  also,  but  gives 
him,  the  promissor,  no  immunity  for  the  false  representations  that 
he  made.  If  the  promissor  made  the  false  representations  with 
fradulent  design,  and  damage  resulted  from  them  to  the  person  rely- 
ing on  the  representations,  the  promissor  is  liable,  though  he  may 
not  have  profited  from  them  or  had  any  interest  in  the  deception, 
and  although  the  fraud  may  have  induced  the  promissee  to  contract 
with  others  as  well  as  the  promissor,  and  the  fact  that  the  promissor's 
false  representations  may  not  have  been  the  sole  inducing  cause  is 
immaterial.1 

§  257.     Fraud  of  Agent;  Pleading  (p.  265) 
Add  the  folio-wing  footnote: 

See  also   §337. 


'Laska  v.   Harris,  215   N.   Y.   554   (1915);   Haener  v.   McKenzie  154  N.   W.    (Mich.) 
59    (1915). 


96 


CHAPTER  XXVII 
LIABILITY  OF  PRINCIPAL  TO  THIRD  PARTIES 

§   260.      Liability  of  Principal  for  Agent's  Wrongdoing 

(p.  267) 

In  Williams  v.  Goldberg,1  the  landlord  was  held  liable  for  injuries 
sustained  by  a  tenant  from  a  falling  ceiling,  the  tenant  having  com- 
plained of  the  condition  of  the  ceiling  and  expressed  the  intention 
of  vacating  the  premises,  and  the  agent  having  represented  that  he 
had  caused  the  ceiling  to  be  examined  and  tested  and  that  it  had  been 
found  to  be  secure,  when  in  fact  no  such  test  had  been  made. 

§  264.     Notice  to  Agent  as  Notice  to  Principal   (p.  270) 

In  Jenkins  v.  Renfrow,2  the  court  quotes  from  Mechem  on  Agency, 
§721,  as  follows :  "The  law  imputes  to  the  principal,  and  charges 
him  with  all  notice  or  knowledge  relating  to  the  subject  matter  of 
the  agency,  which  the  agent  acquires  or  obtains  while  acting  as  such 
agent,  and  within  the  scope  of  his  authority,  or  which  he  may  pre- 
viously have  acquired,  and  which  he  then  had  in  mind,  or  which  he 
had  acquired  so  recently  as  to  reasonably  warrant  the  assumption 
that  he  still  retained  it;  provided,  however,  that  such  notice  or 
knowledge  will  not  be  imputed:  (1)  where  it  is  such  as  it  is  the 
agent's  duty  not  to  disclose,  and  (2)  where  the  agent's  relation  t<> 
the  subject  matter,  or  his  previous  conduct,  render  it  certain  that 
he  will  not  disclose  it;  and  (3)  where  the  person  claiming  the  benefit 
of  the  notice,  or  those  whonii  he  represents,  colluded  with  the  agent 
to  cheat  or  defraud  the  principal." 

The  failure  of  an  agent  to  communicate  to  his  principal  informa- 
tion acquired  by  him  in  the  course  and  within  the  scope  of  his  agency 
is  a  breach  of  duty  to  his  principal ;  but,  as  notice  to  the  principal, 
it  has  the  same  effect  as  to  third  persons,  as  though  his  duty  had 
been  faithfully  performed.3 

"Undoubtedly  a  corporation  is,  in  law,  a  person  or  entity  entirely 
distinct  from  its  stockholders  and  officers.  It  may  have  interest 


*58  Misc.  210;   109  N.  V.   Suppl.   15   (1908). 
2  66  S.   E.    (N.  C.)   212   (1909). 

"Jenkins  v.   Renfrow,  66  S.   E.    (N.   C.)   212   (1909);  Cox  v.  Pearce,  112  N.   V   637; 
20   N. .   E    566;  3  L.   R.   A.  563;   Saw   MIR.   Co.   v.    Rutherford,  64  S.    E.   (W.  Va.)   444. 

97 


98  PRINCIPAL    AND    AGENT 

distinct  from  theirs.  Their  interest,  it  may  be  conceived,  may  be 
adverse  to  its  interest,  and  hence  has  arisen  against  the  presumption 
that  their  knowledge  is  its  knowledge,  the  counter  presumption  that 
in  transactions  with  it  when  their  interest  is  adverse  their  knowledge 
will  not  be  attributed  to  it.  But  while  this  presumption  should  be 
enforced  to  protect  the  corporation  it  should  not  be  carried  so  far 
as  to  enable  the  corporation  to  become  a  means  of  fraud  or  a  means 
to  evade  its  responsibilities.  A  growing  tendency  is  therefore  ex- 
hibited in  the  courts,  to  look  beyond  the  corporate  form  to  the  pur- 
pose of  it  and  to  the  officers  who  are  identified  with  that  purpose."4 


'McCaskill  Co.  v.  United  States,  216  U.  S.  504;  30  Sup.  Ct.  386  (1909);  citing  Cook 
on  Corporations,   §§  663,  664,  727;   Simmons  Creek  Coal  Co.  v.   Doran,  142  U.  S.  417. 


CHAPTER  XXVIII 
LIABILITY  OF  BROKER  TO  THIRD  PARTIES 

§  27 la.     Personal  Liability  of  Agent  on  Contracts  (p.  280) 

"In  ijciKT.il,  when  a  person  acts  and  contracts  avowedly  as  an 
agent  of  another,  who  is  known  as  the  principal,  his  acts  and  con- 
tracts, within  the  scope  of  his  authority,  are  considered  the  acts 
and  contracts  of  the  principal,  and  involve  no  personal  liability  on  the 
part  of  the  agent."1 

While  the  contracts  of  an  authorized  agent  acting  on  behalf  of  a 
known  principal  do  not  impose  a  personal  liability  upon  the  agent, 
yet  an  agent,  though  he  be  known  to  be  such,  may  pledge  his  per- 
sonal credit,  for  the  party  with  whom  he  contracts  may  require  it, 
and  he  himself  may  see  fit  to  assume  the  obligation.2 

§  273.     Liability  of  the  Agent  on  Unauthorized  Contract 

(p.  280) 

"Whenever  a  party  undertakes  to  do  any  act  as  the  agent  of 
another,  if  he  does  not  possess  any  authority  from  the  principal 
therefor,  or  if  he  exceeds  the  authority  delegated  to  him,  he  will  be 
personally  liable  to  the  person  with  whom  he  is  dealing  for  or  on 
account  of  his  principal."3 

"The  rule  as  laid  down  by  the  great  weight  of  authority,  seems 
to  be  that  where  an  agent  undertakes  to  act  for  a  principal  without 
authority,  or  exceeds  his  authority,  even  though  he  in  good  faith, 
but  erroneously,  believes  he  has  authority  to  act,  he  is  responsible 
to  the  other  contracting  party  for  the  damage  he  may  sustain  because 
of  such  want  of  authority."4 


'Roach   v.    Rutter,   105   Pac.    (Mont.)    555    (1909). 

'Jones   v.    Could,  200   N.    Y.   18;   92   N.    E.   1071    (1910) 

'Roach  v.  Rutter,  supra;  Kroegcr  v.  Pitcairn,  101  Pa.  311;  47  Am.  Kcp.  H8| 
F-eter  v  Heath  11  Wend.  (N.  Y.)  47«' ;  Charles  v.  Kschleman,  5  Colo.  10/ ;  Roberts 
v  Button,  14  Vt.  195;  Mcech  v.  Smith,  7  Wend.  (N.  Y.)  315;  Myers  T.  Co  v. 
Keclcy  58  Mo.  App.  491;  Lewis  v.  Reed,  11  Ind.  J31':  Dal.-  v  Donaldson  L.  Co., 
48  Ark.  188;  2  S.  W.  703;  3  Am.  St.  Rep.  224;  Lawson  v.  Cobban,  38  Mont.  138; 
99  pac  i  '\j, 

••Robert's  v.  Tuttle,   105  Pac.    (Utah)   916   (1909). 


Part  IV— Fraud 


CHAPTER  XXIX 

WHAT  CONSTITUTES  FRAUD.    ACTS  NOT  USUALLY 
CONSIDERED   FRAUDULENT 


-    2*5.      Promises.   Hopes,  etc. 

-^A  staf  mii^it  tjfrat  jfftj  apartment  house  can  be  altered  so  that  a 
larger  income  can  be  obtained  from  it  is  a  mere  expression  of 
opinion,  and  not"  a  fact  which  will  serve  as  the  foundation  of  a 


:;.  ^  vtr.iec  :  in  action  :  r  the  -.~::r.:  :•--:'  r~ar,ce  of  a 
contract  to  purchase  that  it  was  induced  by  the  false  and  fraudulent 
misrepresentation  of  a  material  fact.1 

Where,  in  a  suit  to  cancel  contracts  for  the  purchase  of  real 
estate  and  to  recover  the  amount  paid  thereunder,  upon  the  ground 
that  the  defendant's  agent  falsely  and  fraudulently  represented 
that  he  would,  after  one  year,  sell  the  property  for  the  plaintiff 
at  a  profit  of  at  least  ten  per  cent,  and  there  is  no  evidence  that 
plaintiff  was  induced  to  sign  the  contract  by  reason  thereof,  the 
complaint  should  be  dismissed.  An  agreement  to  sell  property  in 
the  future  as  an  inducement  for  one  to  purchase,  does  not  constitute 
a  fraud  in  die  execution  of  the  contract,  in  case  of  a  failure  to  sell  in 
the  future.  It  is  merely  a  breach  of  contract,  and  the  remedy  in  an 
action  for  damages.2 

In  one  case,3  it  was  said:  "The  present  value  of  property  depends 
upon  what  it  will  bring  in  the  market,  and  whatever  influences  sur- 
round it,  conditions  adhere  to  it,  or  prospects  attend  it,  that  form 
a  well-grounded  belief  in  the  minds  of  the  public  as  to  its  value, 
impart  a  value  to  it.  So  that  when  a  man  who  is  familiar  with  real 
estate,  as  Johnson  was,  and  engaged  in  the  business  of  selling  it, 
and  assuming  to  have  peculiar  knowledge  in  relation  to  it,  represents 


"Phyfe  v.  Cdboi.  74  ICse.  2B.  131  ST.  Y.  Son*.  09  0911);  aftL.  153  App.  Dir. 
09;  13B  X.  Y.  Sa«riL  1137. 

•GMtdboK  v.  Park  Temce  Co-.  Mi  Aj»fc  Div.  MO;  154  X.  Y.  SappL  387  (1915). 

imhite  v.  Itmiam,  99  Hm  2»;  »  X.  Y.  St.  Kou  9U;  X  X.  Y.  SnppL  1135; 
a«g.  jd^tt.  S  IbeTlH;  59  K.  T.  St.  Sep.  5fl9;  2B  X.  \  S^pL  CM  (UM). 

UN) 


IS    NOT    USUALLY  EKED    FBAUDULK  '  101 

to  persons,  living  at  a  great  distance,  who  have  no  opportui 
examine  the  property  or  ascertain  the  conditions  that  surround  it, 
that  its  value  is  a  certain  amount,  it  ceases  to  be  speculative  and 
becomes  an  affirmation  of  fact  That  is,  a  fact  based  upon  his 
knowledge  and  experience  and  judgment,  all  of  which  he  is  sup- 
posed to  marshal  together  as  a  basis  of  his  statement  as  to  the 

value If  a  man  has  a  horse  before  him  or  a  farm  in 

sight  which  he  is  trying  to  sell,  the  purchaser  being  present  and 
having  an  opportunity  to  judge  of  the  exact  value  of  any  exaggerated 
statement  he  may  make,  he  may  be  pardoned  perhaps  in  the  coarse 
of  the  trade  and  in  the  anxiety  to  make  a  good  bargain  for  doing 
a  little  'puffing';  but  when  he  goes  to  a  distant  State  and  seeks 
persons  who  are  entirely  unacquainted  with  the  property  he  seeks  to 
sell,  and  who  have  to  rely,  and  do  rely,  upon  his  word,  he  should 
indulge  in  no  'puffing,'  no  exaggeration,  but  simply  tell  the  unvar- 
nished truth  in  all  particulars.  Frauds  of  this  character  are  entirety 
too  common;  they  seem  to  increase  with  the  growth  of  great  cities 
and  in  the  hot  strife  of  booming  localities,  and  they  deserve  con- 
demnation whenever  a  clear  case  is  established." 

In  another  case,4  it  was  said:  "It  seems  to  be  long-settled  law 
in  this  State  that  false  representations  by  a  vendor  as  to  value  are 
not  in  themselves  sufficient  to  support  an  action  by  the  vendee  for 
fraud.5  This  rule  is  qualified  to  the  extent  that  if  the  vendor  resorted 
to  a  trick  or  artifice  to  prevent  independent  inquiry  by  the  vendee, 
he  will  be  held  liable  for  fraudulent  representations  as  to  value.' 
Again,  if.  with  the  representations  as  to  value,  the  vendor  make  a 
false  statement  as  to  any  extrinsic  fact,  which  representation  is  false, 
and  made  with  intent  to  deceive,  then  the  vendee  who  relies  upon  it 
may  have  his  action  for  fraud.  .... 

"In  the  case  at  bar  the  vendee  was  solicited  to  visit  the  land; 
he  did  so;  no  artifice  was  practiced  upon  him  to  prevent  inquiry; 
he  did  not  form  a  favorable  judgment  of  the  offer  to  sell; 
he  did  not  see  profit  in  it  for  him  as  a  speculation.  The  moving 
consideration  of  his  purchase,  according  to  his  story,  was  the  assur- 
ance of  Xarber  that  the  property  could  be  sold  in  the  next  spring 
at  a  profit.  But  this  is  not  a  statement  of  an  existing  fact,  such  as 
to  take  the  case  out  of  the  general  rule.  Xor  was  the  alleged  state- 
ment of  Narber  that  he  could  sell  the  property  for  the  vendee  before 
the  mortgage  came  due,  at  a  profit,  a  statement  of  an  existing  fact. 

'Mcrius  R«li>  irk-r.  166  App.  Di*.  430;  IS1  N.  Y.   SuppL  MS  (1915); 

reversing   >?    MISc.    521 :  SuppL  30J. 

'Ellis  T.  Andrev  to;  Van   SJochem  T.  Vtbrd.  307  N.  Y.  587. 

•Simar  v.  Canada? ,  S3  N.  Y.  298. 


102  FRAUD 

Statements  of  this  nature  as  to  future  events  are  deemed  to  be  but 
speculatively  promissory  and  do  not  constitute  actionable  deceit." 

§  286.      Promises  and   False  Representations    (p.  299) 

A  representation  which  constitutes  a  promise  to  do  something 
in  the  future,  does  not  constitute  fraud.7 

After  "Adams  v.  Gillig"  cited  on  page  290,  add: 

Affirmed,    199   N.    Y.   314;   92   N.    E.   670    (1910). 

§  287.     Opinions;   Expressions  of  Value   (p.  300) 

"No  action  will  lie  for  a  false  representation  by  the  vendor  con- 
cerning the  value  of  the  thing  sold ;  it  being  deemed  the  folly  of  the 
purchaser  to  credit  the  assertion.  And  besides,  value  is  matter  of 
judgment  and  estimation,  about  which  men  may  differ."8 

There  can  be  no  recovery  based  on  any  representation,  even 
though  fraudulently  made,  with  respect  to  the  value  of  the  property.9 

§    289.      Opinions    Amounting    to    Affirmations    of    Fact 

(p.  301) 

That  a  misrepresentation  of  value  is  not  fraud  does  not  apply 
where  the  representations  were  intended  to  be  taken  as  a  fact,  and 
the  parties  did  not  have  equal  opportunity  to  know  the  truth.10 


Add  to  footnote  27  (p. 

Krankowski  v.  Knapp,  268  111.  183;   108  N.   E.  1006  (1915). 

§    291.      When    Expression    of    Opinion    Is    Fraudulent 

(p.  303) 

At  end  of  §  291  (p.  30k),  add: 

Where  the  value  of  the  property  is  peculiarly  within  the  knowl- 
edge of  the  person  making  the  representations,  and  the  relationship 
of  the  parties  is  such  that  the  one  imposed  upon  had  the  right  to 
trust  and  confide  in  the  statements  of  the  other,  the  representations 


7Creighton  v.  Campbell,  27  Colo.  App.  120;  149  Pac.  448  (1915);  Harriage  v.  Daley, 
180  S.  W.  333  (Ark.  1915),  Ensign  v.  Lehmann,  192  111.  App.  578  (1915). 

8Van  Epps  v.   Harrison,   5   Hill    (N.   Y.)    63    (1843). 

"Mecum  v.  Mooyer,  166  App.  Div.  793,  801;  152  N.  Y.  Suppl.  385  (1915);  Van 
Slcchem  v.  Villard,  207  N.  Y.  587;  101  N.  E.  467;  Bennett  Savgs.  Bk.  v.  Smith,  152 
N.  W.  (Iowa)  59  (1915) ;  Buresh  v.  Seymour,  187  111.  App.  295  (1915) ;  Garrett  v. 
Green,  (Tex.  Civ.  App.)  164  S.  W.  1105  (1914).  Cf.  Moon  v.  Benson  (Ala.  App.) 
68  So.  589  (1915);  Rodee  v.  Seaman,  145  N.  W.  (S.  D.)  441  (1914). 

"Van  Vilet  Co.  v.   Crowell,  149  N.   W.    (Iowa)   861    (1915). 


ACTS    NOT    USUALLY    CONSIDERED    I  IIAI  DULENT  1"! 

as  to  value  may  properly  be  regarded  as  statements  of  fact  and  not 
merely  an  opinion.11 

And  the  inexperience  of  the  one  imposed  upon,  and  the  relation- 
ship of  the  parties,  may  even  excuse  the  complainant  in  failing  to 
make  further  inquiry  into  the  matter.12 


"Murphy  v.  Murphy,  78  Misc.  178;  137  N.  Y.  Suppl.  872  (1912);  citing  Simar  v. 
Ci.f.-ulay,  53  N.  Y.  298;'  13  Am.  Rep.  ?J3;  Daiker  v.  Strelinger,  28  App.  Div.  220;  50 
N.  Y.  Suppl.  1074. 

"Murphy  v.  Murphy,  supra,  citing  Eaton  v.  Avery,  83  N.  Y.  31 ;  38  Am.  Rep. 
389;  Clark  v.  Kankin,  .46  Barb.  (N.  Y.)  570;  20  Cyc.  126;  Hall  v.  Perkins,  3  Wend.  627. 


CHAPTER  XXX 

WHAT   CONSTITUTES   FRAUD.      ACTS   USUALLY 
CONSIDERED  FRAUDULENT 

§    293.      Representation   That   Certain    Price    Had    Been 
Offered  (p.  305) 
Add  to  footnote  2: 

Hull  v.    Doheny,  152  N.  W.   (Wise.)   417   (1915). 

§  294.     Representation  as  to  Value  and  Price  Paid  for 
Property  (p.  306) 

misrepresentation  as  to  the  actual  cost  of  the  property  is  a 
material  fact  and  naturally  calculated  to  mislead  the  purchaser.1 

§  295.     Representations  as  to  Rentals  (p.  307) 

A  guaranty  of  a  certain  rental  for  premises  has  been  held  to 
be  merely  contractual  and  as  not  amounting  to  a  representation  that 
the  property  was  then  renting  for  the  sums  specified.2 

Add  to  footnote  10: 

Thaler    v.    Nieder-Meyer,    185    Mo.    App.    257;    170    S.    W.    378    (1915); 
Jacoby    v.    Hollada,    13S   Pac.    (Wash.)    558    (1914).      See   also    §285. 

§    297.       Representations    as    to    Situation    of    Property 

(p.  308) 

Where  a  seller  of  agricultural  land  represented  that  it  was  high 
and  dry,  good  agricultural  land  without  mire,  swamp,  or  boggy  por- 
tions, such  representation  was  a  material  representation  of  fact,  and 
not  mere  seller's  talk  for  which  he  could  not  be  held  responsible.3 

§  300.    Representations  as  to  Title  of  Vendor  (p.  309) 

But  merely  representing  that  a  certain  title  is  good,  the  state- 
ment being  qualified  by  adding  that  another  named  person  would 
not  otherwise  have  taken  a  mortgage  on  the  land,  indicates  that  the 
representation  is  a  mere  opinion.4 


'Sandford   v.    Handy,  23   Wend.    (N.   Y.)    260    (1840). 
sHolmes  v.   Coalson    (Tex.   Civ.   App.)    178   S.   W.   629   (1915). 
3Haener  v.  McKenzie.  154  N.  W.   (Mich.)   59  (1915). 
«Stacey   v.   Robinson    (Mo.   App.)    168  S.    W.  261    (1914). 

104 


CHAPTER  XXXI 
NEGLIGENCE  ON  PART  OF  VENDEE 

§  307.      Negligence  No  Bar  to  Relief  in  Cases  of  Wilful 

Fraud   (p.  316) 

An  echo  of  an  early  New  York  real  estate  boom  is  found  in  an 
old  case,  wherein  it  was  said:  "It  will  seem  marvellous,  if  not  wholly 
incredible,  to  those  who  did  not  live  in  the  years  1835  and  6,  that 
men  should  purchase  lands  lying  within  ten  hours'  ride  of  their  resi- 
dence, and  agree  to  pay  $32,000  without  ever  having  taken  the 
trouble  to  look  at  the  property  either  in  person  or  by  an  agent.  But 
farms  lying  in  the  vicinity  of  cities  and  villages  were  then  so  much 
in  demand  for  the  building  of  new  towns,  that  many  persons  thought 
it  best  not  to  hazard  the  loss  of  a  bargain  by  stopping  to  look  or 
inquire,  when  they  could  purchase  at  a  thousand  dollars  per  acre. 
They  might  better  lose  the  little  sum  of  $32,000  than  be  absent  one 
whole  day  from  Wall  street,  and  thus  miss  the  possible  chance  of 
purchasing  the  site  of  some  other  prospective  city  of  much  greater 
magnitude,  "\Yonderful  as  it  may  seem  to  the  next  generation,  such 
things  did  happen."1 

In  that  case2  the  defendant,  claiming  to  have  been  the  victim  of 
misrepresentations,  offered  to  prove  that  he  knew  nothing  about  the 
land,  except  it  lay  on  the  opposite  side  of  the  river  from  the  city 
of  Albany.  Says  the  court,  "He  trusted  to  the  representations  of 
the  plaintiff  (who  sued  on  a  bond  given  for  the  purchase  money) 
in  relation  to  the  condition  of  the  property,  and  the  only  question 
is.  whether  the  defendant  must  charge  the  loss  upon  his  own  folly, 
and  the  madness  of  the  times,  or  whether  the  plaintiff  lias  done  such 
a  wrong  as  may  be  redressed  by  action.  The  credulity  of  tin- 
defendant  furnishes  but  a  poor  excuse  for  the  falsehood  and  fraud 
of  the  plaintiff,  and  the  latter  will  have  no  just  ground  for  complaint 
if  he  is  held  responsible  for  his  misconduct." 


••Van  Epps  v.  Harrison,  5  Hill   (N.  Y.)  63  (1843). 
•Id. 


105 


CHAPTER  XXXII 
WAIVER.     RESCISSION.     REMEDIES 

§  309.    Waiver  of  the  Fraud  (p.  318) 

It  is  possible  that,  after  having  been  induced  to  purchase  by  fraud 
and  deceit,  a  person  not  only  may  elect  to  retain  the  property,  but 
also  to  waive  his  right  of  action  for  damages.1 

"The  mere  fact,  however,  of  affirming  or  ratifying  the  contract 
by  deciding  to  retain  its  fruits,  as  distinguished  from  approving 
of  the  fraud  and  deceit  and  waiving  any  right  to  redress  on  account 
thereof  is  insufficient  to  show  a  waiver  of  the  cause  of  action  for 
damages."2 

§  310.     What  Constitutes  Waiver  of  Fraud  (p.  319) 

If  a  person,  induced  by  fraud  to  purchase  and  agree  to  pay  for 
real  estate,  subsequently,  with  full  knowledge  of  the  facts,  treats  it 
as  his  own  and  authorizes  his  vendor  to  act  as  agent  for  the  sale 
thereof,  he  thereby  ratifies  the  transaction  and  will  be  remitted  to 
his  action  for  damages.3 

§  317.    Offer  to  Restore  (p.  324) 

"In  contracts  of  sale  which  have  been  fully  executed  on  the  part 
of  the  vendor  by  the  delivery  or  conveyance  of  the  thing  sold,  no 
fraud  on  his  part  in  making  the  contract  can  operate  as  a  complete 
bar  to  an  action  for  the  price,  unless  the  thing  sold  was  absolutely 
worthless,  or  the  vendee  has  returned  or  reconveyed  the  property 
on  the  discovery  of  the  fraud.  When  sued  for  the  price,  the  vendee 
may,  in  general,  recoup  damages;  but  while  he  retains  the  property 
he  cannot  treat  the  contract  as  wholly  void  and  refuse  to  pay  any- 
thing. By  retaining  the  property,  he  affirms  the  validity  of  the  con- 
tract, and  can  be  entitled  to  nothing  more  than  the  damages  which 
he  has  sustained  by  reason  of  the  fraud."4 

'Potts  v.  Lambie,  138  Apn.  Div.  144;  122  N.  Y.  Suppl.  935  (1910);  Cooley  on 
Torts  (3d  Ed.)  965;  Prvor  v.'  Foster,  130  N.  Y.  171;  People  v.  Stephens,  71  N.  Y. 
527;  St.  John  v.  Hendrickson,  81  Ind.  350.  See  also  Cain  v.  Dickenson,  60  N.  H. 
3^1;  New  York  Land  Improvement  Co.  v.  Chapman,  118  N.  Y.  288;  Barr  v.  N.  Y. 
L.  E.  &  W.  R.  R.  Co.,  125  N.  Y.  263. 

"Potts  v.    Lambie,  supra. 

'Syllabus  by  the   court  in   Hammond   v.   Patterson,   123   N.   W.    (Neb.)   304   (1909). 

«Van   Epps  v.  Harrison,  5  Hill   (N.  Y.)  63   (1843). 

106 


107 

WAIVER.       KKSCISSION.        IIKM  KDI KS 

§  319.      Pleading  Fraud  Committed  by  More  Than  One 

(p.  324) 

"The  gist  of  the  action  attempted  to  be  pleaded  is  fraud.  The 
charge  of  conspiracy  is  only  important  to  connect  all  of  the  defend- 
ant with  the  transaction  and  to  charge  each  with  the  acts  and 
declarations  of  the  others."5 


5Lee  v.    Brown,   139  App.   Div.  669;   124   N.   Y.   Suppl.  204    (1910). 


Part  V — Procedure 


CHAPTER  XXXIV 
PLEADING 

§    331.      Pleading   the   Facts   Constituting   the   Cause   of 
Action   (p.  333) 

The  broker  cannot  set  up  in  his  complaint  one  cause  of  action 
and  recover  on  another,  against  the  objection  of  the  defendant,  and 
without  amendment  of  his  complaint.1  This  is,  of  course,  merely  in 
accordance  with  the  fundamental  rule  that  a  judgment  shall  be 
sccundnm  allegata  et  probata.2 

§  333.     Facts  to  be  Stated  (p.  335) 

A  complaint  in  an  action  for  broker's  commissions  failing  to 
allege  non-payment  of  an  earned  commission,  or  an  indebtedness  for 
same,  does  not  contain  the  "plain  and  concise  statement  of  the  facts 
constituting  each  cause  of  action"  required  by  subdivision  2  of  §  481 
of  the  New  York  Code  of  Civil  Procedure,  where  the  other  aver- 
ments thereof  are  not  equivalent  to  an  allegation  of  non-payment.3 

In  Mott  v.  Minor,4  it  seems  to  be  suggested  that  the  complaint 
should  allege  that  the  broker's  authority  continued  till  the  time  when 
his  purchaser  was  secured,  or  at  least  that  it  should  inferentially  so 
appear  from  the  complaint  and  that  otherwise  the  complaint  would 
be  fatally  defective,  and  consequently  the  revocation  of  the  broker's 
authority  is  provable  under  a  general  denial  and  without  being  set 
up  as  a  defense.  This  because  the  rule  is  that  "any  facts  which 
tend  to  disprove  some  one  of  the  material  allegations  of  the  com- 
plaint may  be  given  in  evidence  under  the  denial." 

Add  to  footnote  19: 

The  complaint  must  allege  employment.  Hevia  v.  \Vheelock,  155  App. 
Div.  387;  140  N.  Y.  Suppl.  351  (1913). 

It  is  competent  for  the  plaintiff  in  such  action  to  show  an  employment 
by  an  agent  under  an  allegation  of  employment  by  the  defendant,  because 
the  act  of  the  agent  is  the  act  of  the  principal.  Cannon  v.  Bannon,  151 
App.  Div.  693;  136  N.  Y.  Suppl.  139  (1912).  See  also  §  337. 


^ilvert  v.  Kommel,   138  App.   Div.  229;   122  N.   Y.   Suppl.  846   (1910). 
2Bryant   v.   Ayres,   190  111.   App.  499. 

»Reis  Co.  v.  Post,  162  App.   Div.  463;   147  N.  Y.   Suppl.  845    (1914). 
«(Cal.    App.)    106   Pac.    244    (1909). 

108 


PLEADING  109 

Add  to  footnote  21: 

First  Nat.   Bk.  v.   Story,  200  N.  Y.  346;  93   N.  E.  940  (1911). 

Add  to  footnote  28: 

First   Nat.   Bk.   v.   Story,  supra. 

§   334.      Full  Performance  and  Excuse  for  Performance 

(p.  337) 

On  page  338,  after  "a  complete  sale"39,  add: 

"A  real  estate  broker  negotiating  a  sale  of  land  for  a  person 
who  agreed  with  him,  in  writing,  to  convey  it  to  the  intending  pur- 
chaser, from  whom  he  was  to  receive  his  commission,  may  maintain 
an  action  for  breach  of  contract  upon  refusal  of  such  person  t<> 
convey,  upon  showing  that  the  purchaser  was  ready  to  take  and  pay 
therefor. 

"In  such  case  the  measure  of  plaintiff's  damages  is  the  amount 
he  would  have  received  as  commission  from  the  intending  purchaser, 
had  defendant  complied  with  his  contract."5 
r- 
§  335.     Pleading  Special  Agreements  (p.  338) 

\Yhere  the  complaint  alleges  a  contract  of  employment  to  sell 
only  at  a  specific  price  and  the  performance  of  that  contract,  while 
the  evidence  wholly  fails  to  establish  it,  a  non-suit  is  proper.6 

A  complaint  in  a  broker's  action  for  commissions  setting  out  a 
contract  whereby  the  broker  was  entitled  to  commissions  "upon 
passing  of  title  as  agreed,"  fails  to  state  a  cause  of  action  w'nere 
it  is  not  alleged  that  the  title  passed,  or  that  it  failed  to  pass  by 
reason  of  some  fault  on  the  part  of  the  defendant.7 

§  336a.     Bill  of  Particulars  (p.  340) 

A  bill  of  particulars  of  a  broker's  claim  may  be  had,  especially 
where  the  principal  denies  having  employed  the  broker,  it  having 
been  held  that  the  rule  is  well  settled  that  where  a  party  is  without 
information  concerning  a  contract  alleged  to  have  been  made,  or 
other  negotiations  or  proceedings  alleged  to  have  been  had  or  taken 
by  him  through  an  agent,  he  is  entitled  to  a  bill  of  particulars  giving 
the  name  of  the  agent,  and  specifying  the  time  and  place,  and  to  a 
copy  of  any  contract  or  other  writing.8 


"Atkinson  v.  Pack,  114  N.  C.  597;  19  S.  E.  628;  Robinson  v.   Oklahoma  F.  I.  Co., 

155  S&Sft  KJS?m  Anp.   Div.   510:  U;  X     V     Snppl     17S    O™>. 

•Rei>  Co.   v.   Zimmerli,   155   App.    I  >iv  1     V    SuppK   3    (WU). 

\\stnr    Mortgage    Company    v.    Tcnney,  157    App.     Div.    361;     1 
265    (1913). 


110  PROCEDURE 

Where  the  complaint  in  a  broker's  action  for  commissions  is 
not  based  upon  the  fair  value  of  the  services  but  upon  a  specific 
contract  entitling  him  to  a  certain  percentage  of  the  aggregate  rentals 
to  be  received  by  his  principal,  the  plaintiff  will  not  be  required  to 
give  a  bill  of  particulars  stating  the  amount  of  time  used  by  him  in 
procuring  the  lease,  as  that  is  immaterial.9 

§  336b.     Preference  of  Broker's  Action  on  Trial  Calendar 

(p.  340) 

Naturally,  the  broker  usually  desires  a  speedy  trial  of  his  action 
for  commissions.  In  localities  where  trial  calendars  are  overcrowded 
with  litigation,  and  delays  result,  either  code  provisions  or  local 
rules  give  preference  to  certain  classes  of  cases.  Actions  for 
work,  labor,  and  services  are  frequently  so  preferred,  and  it  has 
been  sought  to  place  in  that  category  broker's  actions  for  com- 
missions. 

In  one  case,  in  commenting  upon  a  local  preference  calendar 
rule,  it  was  said: 

"This  action,  by  broker  for  commissions  on  sale  of  land,  is  sought 
to  be  advanced  under  Kings  County  Calendar  Rule  10.  Formerly 
this  rule  preferred  'any  action  on  contract,'  which  clause  was  stricken 
out  in  1909.  After  seeking  to  have  the  cause  preferred  by  the 
calendar  clerk  as  an  action  on  contract  (which  the  clerk  refused), 
plaintiff  now  moves  to  prefer  the  cause  as  'for  work,  labor  and 
services,'  within  Rule  10  as  amended.  This  language  usually  means 
ordinary  employment  analogous  to  'wages,  salary  or  compensation 
for  services,'  as  used  in  the  corresponding  Calendar  Rule  V  in  the 
First  Department.  The  rule  giving  preference  over  other  suitors 
should  not  have  a  broad  construction,  but  rather  should  be  limited 
to  the  ordinary  import  of  this  language,  which  primarily  designates 
labor  claims.10  It  not  being  shown  that  actions  for  brokers'  com- 
missions have  been  so  preferred  under  the  work  and  wages  prefer- 
ence, either  in  the  First  or  Second  Departments,  the  present  applica- 
tion is  denied."11 

In  another  case,  the  appellate  division  of  the  same  court  held 
that  an  action  for  broker's  commissions  was  entitled  to  preference 
on  the  calendar  under  the  same  rule  above  mentioned.12 


"Fragner  v.   Fischel,   141   App.   Div.  869;   126  N.   Y.   Suppl.  478    (1910). 
10Bristor   v.    Smith,   22   Misc.   55,  approved  in   158   N.   Y.   157. 
"St.   John   v.    Kloppenberg,   46   N.    Y.   Law  Journal,   360    (Oct.   24,   1911). 
12Sprague  v.   Tangiers   Dev.   Co.,  152  App.   Div.  921;   137   N.   Y.   Suppl.   746    (1912). 


PLEADING  111 

§  337.     Pleading  Acts  Done  by  Agent  (p.  340) 

While  acts  and  contracts  may  be  stated  according  to  their  legal 
effect,  it  has  been  asserted  that  an  act  or  promise  by  a  principal 
(other  than  a  corporation),  if  in  fact  proceeding  from  an  agent 
known  to  the  pleader,  should  be  so  stated.13 


"Conn.    Practice    Book,    §144. 


CHAPTER  XXXV 
INTERPLEADER 

§  345.     Requisites  of  Interpleader  (p.  351) 

In  the  ordinary  case  of  rival  brokers  claiming  a  commission,  inter- 
pleader is  proper,  but  not  so  where  the  employer  has,  by  his  conduct, 
left  himself  open  to  liability  to  both  rival  brokers.  Where  the  owner 
or  lessor  in  the  ordinary  way  submitted  his  property  to  several 
brokers  for  sale  or  for  rental,  the  owner  is  not  responsible  for  the 
fact  that  two  brokers  undertook  negotiations  with  the  same  pros- 
pective purchaser  or  lessee,  especially  where  each  of  the  brokers 
knows  that  the  other  is  endeavoring  to  interest  the  same  prospective 
purchaser  or  tenant.  Where  the  owner  or  lessor  admits  his  liability 
to  either  one  of  the  two  brokers,  he  may  be  released  upon  the  pay- 
ment of  the  money  into  court  and  interpleading  the  adverse  claimant.1 

But  the  defendant  is  not  entitled  to  an  order  of  interpleader 
merely  because  two  claims  are  made  against  him  for  the  same  debt, 
but  the  two  claims  must  be  of  such  a  nature  that  he  cannot  deter- 
mine the  validity  of  the  claims  without  hazard.  In  this  sense,  the 
making  or  withholding  of  the  order  rests  within  the  sound  discretion 
of  the  court.2 

And  so,  on  a  motion  for  interpleader,  it  is  not  enough  to  show 
that  a  claim  is  made  against  the  vendor  by  another  broker  for  pay- 
ment of  an  amount  of  money  equal  to  the  sum  claimed  by  the  broker 
who  sues  the  vendor  for  the  commission.  It  should  be  shown  that 
the  broker  who  also  claims  the  commission  has  some  foundation  for 
his  claim,  and  that  the  vendor  cannot  determine  without  risk  to 
whom  the  commission  should  be  paid.  A  mere  assertion  of  a  claim 
is  not  enough  to  sustain  an  order  of  interpleader.  It  should  also 
be  shown  that  the  two  different  brokers  claiming  the  commission 
are  not  claiming  under  separate  agreements.3 

Where,  in  an  action  for  interpleader  brought  under  §  820a  of 
the  New  York  Code  of  Civil  Procedure,  the  complaint  follows  the 
requirements  of  said  section,  but  nothing  whatever  is  stated  either 
in  the  complaint  or  the  affidavits  showing  the  basis  of  the  claims  of 


'Fox  v.   Cammeyer,  93  Misc.   180;  156  N.  Y.   Suppl.  1046   (1916). 
'Mitchell  v.  Catlin  Co.,  71  Misc.,  450;  128  N.  Y.  Suppl.  692  (1911). 
'Cross  v.    Ludin   Realty   Co.,  90  Misc.   606;   154  N.    Y.    Suppl.   26   (1915);    Gonia  v. 
O'Brien,  223  Mass.  177;  111  N.  E.  787  (1915). 

112 


INTERPLEADER  113 

the  defendants  beyond  the  mere  statement  that  they  all  assert  claims 
and  have  made  demands  upon  the  plaintiff,  the  plaintiff's  motion 
for  leave  to  pay  into  court  should  be  denied.  "It  is  necessary  to 
sustain  an  action  of  interpleader  or  a  motion  under  the  Code  to  show 
that  the  alleged  claims  have,  or  in  case  of  a  motion  the  claim  of 
a  third  person  has,  some  reasonable  basis  on  which  to  rest.  While 
it  has  never  been  held  that  it  is  necessary  to  sustain  an  interpleader 
to  show  that  a  claimant  will  probably  succeed  in  establishing  his 
claim,  a  mere  assertion  of  claim  by  another  without  alleging  anything 
whatever  on  which  to  base  it  is  not  enough."  Although  it  may  not 
be  necessary  in  such  action  that  the  complaint  should  state  the  facts 
tending  to  show  that  the  conflicting  claims  to  the  fund  rest  upon  a 
reasonable  basis,  such  facts  should  be  set  forth  by  affidavit  upon  the 
motion  for  leave  to  pay  into  court.4 

In  Smith  v.  Fowler,5  a  case  in  which  the  owner  brought  the  com- 
mission into  court  because  of  conflicting  claims  thereto,  it  was  said, 
"No  one  attacked  or  denied  his  (the  owner's)  right  to  interplead  the 
different  claimants  in  the  lower  court,  and,  if  there  was  any  force 
or  strength  in  the  contention  that  an  interpleader  should  not  have 
been  allowed,  the.  matter  cannot  be  raised  for  the  first  time  in  this 
court." 


'Sulzberger   v.    Seklir.   153   App.    Div.   749;    138   N. 
"57   Tex.   Civ.   App.  356;   122  S.    VV.   598    (1909). 


Y.   Suppl.  691    (1912). 


Part  VII — Schedules  and  Forms 


CHAPTER  XXXIX 

FORMS  OF  CONTRACTS  FOR  SALE  OF 
REAL  ESTATE 

Form   17 — Contract   of   Sale.      New   York   City    (p.    398) 

To  clause  (p.  400)  stating  that  gas  fixtures,  etc.,  pass  with  sale, 
add:   "storm  sash  and  storm  doors." 


CHAPTER  XL 
MISCELLANEOUS  FORMS 

Form  36a — Exclusive  Agency  Agreement   (p.  427) 

To 

Brooklyn,  N.  Y 19 

I  HEREBY  GRANT  You,  for  a  period  of months  from  this  date, 

and  thereafter  until  this  agreement  is  revoked  by  notice  in  writing  deliv- 
ered to  you,  the  exclusive  right  to  sell  the  property  hereinafter  described; 
and  in  consideration  of  your  accepting  said  agency  and  advertising  and 
endeavoring  to  sell  said  property,  I  hereby  agree  to  pay  you  as  a  com- 
mission all  in  excess  of  the  price  hereinafter  fixed,  if  a  purchaser  is 
procured  ready,  able,  and  willing  to  enter  into  a  contract  upon  the  terms 
named  or  upon  any  other  terms  which  I  shall  accept,  and  if  I  or  any  other 
agent  shall  sell  the  same,  I  will  pay  you  a  commission  of  \%  on  the 
sale  price. 

114 


MISCKU.. \.\Kors   roi:. MS  115 

Said  property-  is  known  as   Xo 

in  the  Borough  of  Brooklyn,  City  of   NYw   York feet  in  width  in 

front  and  rear  by feet  in  depth  on  the side  of 

avenue 

street feet of 

upon   which  there  is  erected 

The  price  is  $ payable  as  follows : 

$ when  contract  of  sale  is  signed;  $ by  the  pur- 
chaser taking  said  property  subject  to  a  mortgage  for  that  amount,  due 
bearing  interest  at %  per  annum,  payable 


$ by  the  purchaser  giving  me  a  purchase  money  mortgage  for 

that  amount,  due bearing  interest  at %  per  annum,  payable 


$ in  cash  or  certified  check  when  deed  is  delivered. 

I   agree  to  enter  into  a  formal  contract  of  sale  with  the  purchaser 

allowing  him days   to  close   title  and  containing  the 

usual  clauses  and  covenants. 

Singular  pronouns  of  the  first  person   shall  be  read  as  plural  when 
this  agreement  is  signed  by  two  or  more  persons. 
Witness : 

(L.S.) 

U.S.) 

Accepted :  (L.S.) 


Form  40a — Acceptance  of  Mortgage  Application;  Gen- 
eral New  York  Title  Companies'  Form;  Personal 
Liability  of  Applicant  (p.  432) 

Dated 

Amount  $ Interest %.  Fees   $ 

1.  Applicant    Conveyancing    .  ..$ 

Address   Recording  Fees. .  $ 

2.  Insure    Mortgage  Tax..  .   $ 

Address    Survey    $ 

3.  Title  of  fee  in Additional  papers  $ 

4.  Title  of  mortgage  in 

5.  Xame  of  wife  or  husband 

6.  Premises   .  Total $ 


to  be  paid 
7.   Existing  mortgages to  rcmain 


8.  MurtLia^r.  '-   name  and   address 

9.  To  be  reported 191  .     To  close 191 


116  SCHEDULES    AND    FORMS 

10.  Close  at  office  of No M. 

11.  Papers   to  be   drawn 

(In  case  of  mortgages  state  amount,  maturity,  rate  of  interest,  and 
any  special  clauses.) 

12.  Remarks,  encumbrances,  and  other  details,  if  any 

13.  Papers  left  with  company 

(Space  may  here  be  left  for  diagram  of  the  property,  if  diagram 
is  desirable  in  addition  to  or  in  place  of  above  reference  to  the 
premises.) 

The  undersigned  hereby  personally  employs  the 

Company,  to  examine,  according  to  its  system,  the  title  to  the  premises 
above  mentioned,  and  in  consideration  for  the  credit  extended  to  him 
personally,  the  applicant  personally  agrees  to  pay  said  company,  the  fees 
above  mentioned,  together  with  all  sums  expended  or  disbursed  by  said 
company  for  recording  or  filing  fees  and  also  the  Company's  regular 
charges  for  surveys  and  the  preparation  of  papers. 

The  statements  made  on  this  memorandum  are  correct  and  true  to  the 
best  of  the  belief  of  the  undersigned.  If  the  undersigned  before  the 
closing  of  the  title  should  have  any  further  information  or  intimation  as 
to  defects,  objections,  liens,  or  encumbrances  affecting  said  premises,  the 
same  will  at  once  be  fully  made  known  to  the  Company.  The  Company 
shall  have  the  right  to  decline  to  approve  the  title  for  any  reason  deemed 
sufficient  by  any  of  its  officers,  its  solicitor  or  an  assistant  solicitor,  or  one 
of  its  counsel,  and  the  undersigned  agrees  to  pay  said  fees  and  disburse- 
ments whether  the  title  is  accepted  or  declined.  This  agreement  is  in  no 
way  conditional  or  dependent  upon  a  loan  being  made.1 


Form    43a — Agreement    for     Compensation     for     Loan2 

(p.  436) 

Jones  and  Smith,  brokers   (or  attorneys),  having  secured  the  accept- 
ance of  the  above  (or  within)  loan  from  a  client,  I  (or  we)  hereby  agree 

to  pay  them  the   sum  of  $ for  having  secured  such   acceptance, 

and  for  examining  or  procuring  the  examination  or  guarantee  of  the 
title  to  said  lands,  drawing  and  recording  papers,  mortgage  tax,  survey 
and  all  disbursements ;  and  I  further  agree  to  pay  them  said  sum  if  the 
money  is  not  actually  advanced  because  of  defects  in  the  title  (or  in  case 
they  decide  that  the  title  is  not  satisfactory). 


1See   authorities   under    §  191,   supra. 

:The  above  form  may  be  printed  or  written  at  the  foot  or  on  the  back  of  any  of 
the  foregoing  applications  for  loans.  This  form,  by  using  the  last  clause  in  parenthesis, 
may  be  made  quite  advantageous  to  the  broker  or  attorney  procuring  the  loan.  (See 
sec.  191;  see  also  form  of  New  York  City  title  companies.  Form  40a.) 


INDEX  TO  SUPPLEMENT 

(References  are  to  pages.) 


Abstract  of  title, 

broker  can   impose  obligation  to  give,  21 

broker  cannot  impose  obligation  to  give,  21,  46 
Acceptance  of  mortgage  application,  Forms,  15 
Accounting  for  commissions, 

between  several  brokers,  28 
Advertising  by  broker,  42 

untrue  and  misleading,  is  criminal  offense  in  New  York,  43 
Amount  of  commissions, 

all  in  excess  of  fixed  price,  80,  81 

custom,  81 

in  absence  of  agreement  or  custom,  81 

on  failure  of  parties  to  carry  out  exchange  contract,  80 

promises  to  pay  increased  commission,  80 
Appraisals,  compensation  for,  32 
Arizona,  authority  to  sell  or  purchase,  19 
Attorneys  at  law  acting  as  brokers,  12 
Authority  of  broker, 

oral  modification  of  written,  17 

revocation  of     (See  "Revocation  of  broker's  authority") 

to  employ  other  brokers,  28 

to  make  and  endorse  negotiable  paper,  95 

to  sign  contract,  20,  21 

when  required  to  be  in  writing,  17-19 
Availability  of  purchaser, 

who  is  ready,  willing,  and  able,  52,  53 

B 

Bill  of  particulars,  109 

Broker,     (Sec  also  "Insurance  broker") 

acting  for  both  sides     (See  "Double  employment") 

act  in  own  interest  presumed  to  be  injurious  to  principal,  26 

act  in  own  interest  voidable,  26 

117 


118  INDEX    TO    SUPPLEMENT 

Broker — Continued 

may  not  act  also  as  principal,  25 

except  perhaps  when  minimum  price  is  fixed,  26 
may  not  make  secret  profit,  25 
who  may  act  as,  11 

C 

California,  authority  to  purchase  or  sell,  18 
Catalogue     (See  "Advertising  by  broker") 
Change  of  mind  by  vendor,  53 
Chicago,  ordinances  requiring  license,  12 
Collusion  as  to  identity  of  broker,  93 

Commissions,      (See    also    "Exchange    of    property";    "Liability    for 
commissions";  "Loans";  "Leases") 

amount  of,  80,  81 

instalment  sales,  commissions  on,  85,  86 

invalid  agreements  to  wait  for,  83 

Sunday  sales,  87-92 

valid  agreements  to  wait  for,  84,  85 

when  due,  83 
Compensation,     (See  also  "Commissions") 

for  appraisal,  32 

for  loan  agreement,  Forms,  116 
Completeness  of  transaction, 

optional  contract  is  not,  57 
Conspiracy     (See  "Fraud") 
Consummation  of  sale  by  principal,  43 
Contingent  commission  agreements,  85 
Contract  of  sale, 

Forms,  114 

naming  broker  in,  effect  of,  39 

Sunday,  92 
Corporations, 

liability  for  commissions,  73,  75 

notice  to  agent  is  notice  to  principal,  97 
Credit,  broker  has  no  general  authority  to  extend,  46 
Custom     (See  "Amount  of  commissions") 

D 

Defective  title,  as  cause  of  failure  of  deal,  58 

Deferred  commissions,  agreements  to  wait  for  commissions,  83-85 

Double  employment, 

how  question  raised,  24 

is  breach  of  contract,  22 

rule  applies  to  exchange,  22 

where  broker  has  no  discretion,  23 

with  knowledge  of  both  sides,  23 


INDEX    TO    SUPPLK.MKN  I  11M 


Employment, 

by  purchase,  vendor  to  pay  commissions,  37 

manner  of,  37 

of   one   broker   by   another,   28      (See   also   "Several   brokers") 

volunteers,  37 
Exchange  of  property, 

authority  to  sell  does  not  imply  authority  to  exchange,  62 

double  employment,  22 

when  commissions  are  earned,  62 

when  contract  of  exchange  is  not  performed,  commissions,  62,  63,  80 
Exclusive  agency,  94 

agreement  for,  Forms,  114 
Executors,  liability  for  commissions,  72 
Expert  testimony,  compensation  for,  32 


Failure  of  broker's  efforts, 

because  of  defective  title,  58 
through  fault  of  customer,  60 
through  fault  of  principal,  58,  59 
through  misrepresentation  of  seller,  61 

Fees  of  title  companies,  who  is  liable  for,  72 

Financial  ability  of  purchaser, 
burden  of  proof  as  to,  56 
when  need  not  be  shown,  54 

Fraud, 

as  to  price  offered,  104 

as  to  price  paid,  104 

as  to  rentals,  104 

as  to  situation  of  property,  104 

as  to  title  of  vendor,  104 

as  to  value,  100-102 

negligence  no  bar  to  relief,  105 

offer  to  restore,  106 

opinions   ordinarily   not,   102 

opinions,  when  fraud,  102,  103 

pleading  fraudulent  conspiracy,  107 

promises,  hopes,  etc.,  100,  102 

promises  to  re-sell,  100 

promises  to  sell  in  future,  100 

waiver  of,  106 


120  INDEX    TO    SUPPLEMENT 

G 

Good  faith, 

in  exchange  of  property,  63 

refusal  of  broker  to  disclose  information,  51 

what  is.  lack  of,  48-50 

when  lack  of,  must  be  pleaded,  48 
Guardians,  liability  for  commissions,  72 

H 
Husband  and  wife,  liability  for  commissions,  71,  72 


Increased  commissions,  promise  to  pay,  80 
Indiana,  authority  to  sell,  19 
Instalment  sales,  commissions  on,  85,  86 
Insurance  broker, 

authority  of,  31 

is  agent  for  whom,  30,  31 

liability  of,  31 

license  of,  15 

when  cannot  insure  himself,  31 
Interpleader,  requisites  of,  112,  113 


Labor  law,  liability  of  renting  agent  for  violation  of,  29,  30 
Leases, 

naming  broker  in,  effect  of,  39 

renewal  of  lease,  commissions  on,  69 

requirements  as  to  earned  commission,  68 

sale  of  leasehold,  commissions  on,  70 

when  broker's  obligations  are  performed,  68,  69 
Liability  for  commissions, 

corporations,  73,  74 

employer  ordinarily  liable,  71 

husband  and  wife,  71,  72 

person  not  owning  the  property,  71 

purchaser,  75-79 

trustees,  executors,  and  guardians,  72 
Liability  of  broker, 

on  contracts,  99 

on  unauthorized  contracts,  99 
Liability  of  insurance  broker,  31 
Liability  of  principal, 

for  broker's  misrepresentations,  96   (See  also  "Misrepresentation") 

for  negligence  of  agent,  97 


INDEX   TO   SUPPLEMKN  I  121 

License, 

Chicago  ordinances  as  to,  12 

of  insurance  brokers,  15 

to  act  as  broker,  12-15 
Loans, 

acceptance  of,  Forms,  117 

agreement  for  compensation  for  procuring,  Forms,  118 

amount  of  commissions  on,  66,  67 

commissions  on,  New  York  rule,  64,  65 

defects  as  cause  of  failure  to  loan,  66 

M 

Minimum  price,  right  of  broker  to  buy  at,  26 
Misrepresentations,     (See  also  "Fraud") 

as  to  identity  of  purchaser,  94 

as  to  rents,  60 

by  broker,  who  liable  for,  96 

by  purchaser  as  to  who  is  procuring  cause,  79 
Missouri,  authority  to  sell  nerd  not  be  written,  18 
Modification,  oral,  of  written  authority,  17 
Mortgage  application,  acceptance  of,  Forms,  115 

N 

Negligence, 

liability  of  piincipal  for  agent's,  97 

no  bar  to  relief  for  fraud,  105 
New  Jersey,  authority  to  sell  or  exchange,  18 
Notice  to  agent,  as  notice  to  principal,  97 
Notifying  principal,  that  customer  is  broker's  client,  42 


Option,  procuring,  docs  not  ordinarily  entitle  broker  to  commission, 

53,  57 
Oregon,  authority  to  sell  or  purchase,  18 


Performance,  pleading,  109 
Pleading, 

acts  done  by  agent,  111 

facts  to  be  stated,  108 

performance,  109 
Preference  on  trial  calendar,  110 
Previous  sale,  revocation  of  broker's  authority,  34.  'M 


122  INDEX   TO    SUPPLEMENT 

Principal, 

collusion  with  purchaser,  that  another  party  was  purchaser,  94 

consummation  of  sale  by,  43 

intervention  by,  94 

may  employ  several  brokers,  93 

relations  of  agent  to,  95 

relations  of,  to  agent,  93,  94 
Procuring  cause, 

advertising,  42 

broker  must  be,  38 

effort  required  of  broker,  40 

general  rule  as  to,  39 

misrepresentations  of  purchaser  as  to  who  is  procuring  cause,  79 

notifying  principal  of  customer,  42 

presence  of  broker,  41 

unsuccessful  efforts,  40 

when  broker  is,  38 

Profits,  secret,  broker  may  not  make,  25,  27 
Promises  to  pay  commissions, 

effect  of,  39 

increased  commissions,  80 
Public  officials  acting  as  brokers,  11 
Purchaser, 

employment  of  broker  by,  vendor  to  pay  commissions,  37 

financial  ability  of,  54,  56 

mere  "paper  offer"  is  not  sufficient,  40 

when  liable  for  commissions,  75-79 


Ready,  willing,  and  able     (See  "Availability  of  purchaser";  "Complete- 
ness   of   transaction";    "Exchange    of   property";    "Failure    of 
broker's  efforts";  "Financial  ability  of  purchaser";  "Leases"; 
"Loans";  "Option";  "Purchaser") 
Relations  of  agent  to  principal,  95 
Relations  of  principal  to  agent,  93,  94 
Rentals,  misrepresentations  as  to,  104 
Renting  agent, 

liability  of,  for  violation  of  Labor  Law,  29,  30 
Resale,  promise  as  to,  100 
Rescission  in  case  of  fraud,  106 
Revocation  of  broker's  authority, 

after  lapse  of  reasonable  time,  33 

by  mutual  consent,  33 

by  previous  sale,  34,  93 

must  be  in  good  faith,  34 


INDKX    TO    Sri'lM.I.M  I.N  I  123 


Secret  profits,  broker  may  not  make,  J5.  11 

Several  brokers,      (Sec   also   "Authority   of  broker";   "Kmployment' 
"Interpleader" ) 

commissions  on  lease,  68,  69 

principal  liable  to  broker  who  is  procuring  cause,  93 

proof  pennissibl'1  as  to  whom  commissions  \\i-n-  paid,  93 

respective  rights  of,  35 

sale  by  one  terminates  authority  of  others,  93 
Signing  contracts  of  sale,  authority  of  broker,  20,  21 
Sunday  sales,  commissions  on.  S7-''J 


Tax  on  right  to  act  as  broker,  12 

Termination  of  broker's  authority,     (See  also  "Revocation") 

sale  by  one  broker,  terminates  authority  of  others,  93 
Terms  of  sale, 

cannot  be  changed  after  acceptance,  44 

performance  at  seller's  house  or  place  of  business,  46 

principal's  terms  must  be  met,  44,  45 
Testimony,  expert,  compensation  for,  ,?J 
Trial  calendar,  preference  on,  110 
Trustees,  liability  for  commissions,  72 


Value,  fraud  as  to,  100-102 

W 

Washington,  authority  to  sell  or  purchase,  18 
Written  authority  of  broker,  17-19 


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